Cyber insurers and brokers seek harmony on crafting coverage

PHILADELPHIA—With cyber risk as the hottest topic during the Risk and Insurance Management Society’s (RIMS) annual conference here, a common theme emerged: Now is the time for collaboration and innovation among brokers and insurers, but the best way to achieve that is yet to be determined.

However, the steps taken to achieve broad cyber coverage at the right price with the right players represent an area of collegial disagreement among many industry participants. How many carriers should be on a tower and at what limits? What’s the current capacity ceiling? How broad is too broad in coverage terms?

Building upon the 2016 RIMS event—when the main topic of conversation addressed the strides cyber insurers needed to make to meet organizational needs of buyers—this year’s talks reflect the fact business interruption (both contingent and direct), cyber-related property damage, bodily injury, and reputational harm are all risks for which the growing cyber insurance marketplace has developed solutions.

In interviews with Advisen during the event, insurers and brokers reported widespread interest in cyber coverage, an unsurprising fact. Previous non-buyers in industries such as manufacturing now eagerly look to protect their property and operations from cyber-related disruption and damage. Existing buyers are seeking higher limits.

More for the money

“The dollar that a client spends today, they’re getting a lot more coverage than two to three years ago,” said Bob Parisi, cyber product leader for Marsh.

Pricing in the cyber market also appears to be moderating. While some industries like healthcare or payment processors might continue to see higher prices, “aggressive” pricing exists for other risks, with flat rates or decreases for many buyers.

Pricing tends to get a bit tougher for large towers over $400 million in capacity, reported Steve Bridges, senior vice president with JLT Specialty.

For those buyers looking to expand their limits, the interest might be there, but the prices don’t always fit the budget.

“95 percent of the time, [buyers] don’t want to pay for it,” said Bret Ahnell, FM Global’s executive vice president of staff operations. He added, though, there’s always going to be one client who is going to buy $100 million in limits at any price because their board demands it.