Cyber consumers must tighten safety controls: Amwins – Enterprise Insurance
Cyber insurance buyers who do not have the necessary security controls to mitigate risk could face higher rates, non-renewals or declines from insurers, Amwins Group Inc. said in a report Wednesday.
The Charlotte, North Carolina wholesaler said that in addition to rising tariffs and more restrictive conditions, the lack of multi-factor authentication for policyholders is proving to be a "challenge" in securing cyber liability insurance.
"In the future, the market will require insured parties to demonstrate that they have the necessary security controls to mitigate risk, such as the network]," said Amwins in his report on the market condition for the second quarter of 2021.
Ransomware, an issue most commonly triggered by lenient security controls, was the top driver of damage in terms of both frequency and severity over the past year, Amwins said.
"We are currently seeing underwriters putting pressure on the security controls of the insured to better mitigate the risk," it said.
Specialty insurance markets have seen some of the toughest market conditions most have seen in the past two years, James Drinkwater, president of Amwins and Amwins Brokerage, said in the report.
“The market is still dynamic. While we have seen a slowdown in the interest rate environment in some areas, we see a dramatic increase in others, ”said Dr. Drinkwater.
All professional lines are feeling the effects of a tough insurance market, with cyber liability continuing to experience the biggest shift, Amwins said.
Very few markets are willing to offer $ 10 million limits on cyber risk. "Most accounts that bought a limit of $ 10 million from a single provider in 2020 have now lowered those limits to $ 5 million – with prices sometimes increasing dramatically when renewed," it says the report.
Directors and officers liability has seen some interest rate flattening, but this could change abruptly as merger and acquisition activity and special-purpose acquisition firms increase, Amwins said.
For the D&O market as a whole, the renewals show increases of between 9% and 12%, higher for accounts with losses or higher risk.
In the real estate market, capacity remains sufficient, with availability depending on risk perception and rate. Surplus and surplus insurers are more willing, according to the report, to accept flat rate increases of up to 10% in more desirable business areas.
However, the Florida real estate market is seeing interest rate hikes of 15% to 30% as a best-case scenario following the Champlain Towers tragedy.
The remaining four months of 2021 will be a “stage” for disaster-exposed businesses in a year that was already active in climate-related claims, Amwins said.
The E&S market remains responsive, with surplus line premiums increasing 22% in the first half of 2021.
In terms of the numbers of surplus accidents, public utilities, housing and housing remain some of the more difficult sectors, along with the risks of forest fires, the report said.
"To stay at the forefront of this heavy liability insurance market, retailers and brokers must have full filings with detailed risk characteristics and be well ahead of renewals," said Amwins.