A number of trends and shifts in Cyber Liability Insurance, a much-needed insurance solution, were cited in the survey’s recent report:
- There is an increasing demand for cyber insurance coverage in sectors beyond healthcare, retail, and financial institutions, such as professional services.
- There have been shifts in the factors driving cyber sales, especially as more third parties are requiring the coverage.
- The importance of first-party coverage is changing as new causes of loss emerge, such as cyber extortion and funds transfer fraud.
Let’s take an inside look at these trends.
While the healthcare sector is among the top three industries bringing new buyers of cyber insurance into the market, professional services jumped from fourth place to second place in the 2015 Advisen Survey this year, surpassing both retail and financial services. One of the reasons for the rise in professional services seeking to buy coverage is the growing awareness among organizations of their vulnerability to cyber loss and the need to insure against it.
In general, two-thirds of respondents cited news of a cyber-related loss at another organization as a reason for a company to purchase Cyber insurance, and nearly half cited the occurrence of a cyber-related loss in the insured’s own operations for buying coverage. In addition, the report cites that this year the requirement of cyber insurance coverage by a third party scored second highest as a buying factor, whereas in 2015 it came fifth, marking a significant shift in entities not willing to take on any indirect exposure to cyber losses. Moreover, respondents cited requirements of board members and senior management as a driver of Cyber Liability Insurance sales.
The purchase of first-party insurance covering cyber extortion is becoming more prevalent due to the spike in ransomware. Ransomware refers to a number of versions of malicious software which takes control of a target’s computer, encrypts all the data on it, and renders it inaccessible. The software’s developers then demand a payment, typically in a digital currency such as bitcoin, in exchange for handing over the encryption keys.
While more businesses are purchasing cyber coverage, there are still obstacles with which to contend. The biggest obstacle to writing cyber coverage, according to the respondents, is a lack of understanding exposures on the part of businesses as well as a lack of understanding of the coverages available.
About Axis Insurance Services
At Axis Insurance Services, we specialize in securing Cyber Liability/Privacy & Network Security insurance and are available to assess your firm’s specific exposures and provide a detailed explanation of how the various policies on the market today would respond in the event of a loss. We provide coverage for a broad spectrum of industry sectors, including those in professional services, healthcare, and others. For more information about our products, contact us at (877) 787-5258.