Insurance Week: Tougher Cyber Policies, Natural Disaster Losses, Rising FL Property Claims, AIG

Cyber Insurers Toughening Policy Requirements:

Cyber policies are relatively new to the insurance business. But over the past decade the cyber insurance sector has taken off, with premiums more than doubling between 2015 and 2019, from $1.4 billion to $3.1 billion. Now, with cyberattacks coming one after another, cyber insurers are rethinking the way they do business.

U.K.-based Hiscox Ltd. said it is “refining” its cyber business and plans to focus on smaller customers based in the United States.

Some cyber insurers are charging more for policies. Cyber insurance customers paid 35 percent more for their coverage in the first quarter of this year than they did in the first quarter of 2020, according to broker Marsh McLennan.

Insurers are also toughening up their underwriting standards. For instance, as part of its underwriting process, American International Group Inc. (AIG) has begun requiring its customers to employ certain security measures.

“People went a little over their skis, so right now there’s been a bit of a contraction,” said Joshua Motta, co-founder and CEO of insurer Coalition.

Some are even making the case that cyber risks are so great that governments should start backstopping the market, as the U.S. government did with regard to terrorism risk following the Sept. 11 attacks.

“Cyber security in general, by definition, should be collaborative,” said Jennifer Rothstein, head of business development, insurance and legal for cybersecurity provider BlueVoyant. “Private sector should work with law enforcement, and work with a lot of different sectors, because the risks are so severe.”

But Samantha Levine, a senior vice president at U.S. insurance broker CAC Specialty, said the current turmoil in the industry is only temporary.

“Cyber insurance will stay,” she said. “We’ll see this pullback and restriction of coverage, and then we’ll see a right-sizing of the premiums, and then the organizations and the insurers will start to be profitable again.” (INSURANCE JOURNAL, NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS)

New Cybersecurity Requirements for WI Insurers:

Wisconsin Gov. Tony Evers (D) signed a bill (SB 160) this month creating new cybersecurity requirements for the insurance industry.

Patterned on model legislation developed by the National Association of Insurance Commissioners (NAIC), the new law requires anyone licensed with Wisconsin’s Office of the Commissioner of Insurance (OCI) to “develop an information security program that protects its systems and data,” according to an OCI press release.

The law also requires insurers to “conduct a risk assessment and address any areas that put their consumer’s data or their IT systems at risk” within the next 12 months, as well as “develop an incident response plan and provide notice in a timely manner to consumers affected by a data breach.” (WISCONSIN OFFICE OF COMMISSIONER OF INSURANCE)

Global Insured Losses from Natural Disasters Hit $42B:

Halfway through 2021, insured losses due to natural disasters around the world have reached $42 billion, the highest sum in 10 years, according to a report from insurance broker Aon PLC. Aon said 72 percent of the global losses were associated with natural disasters in the United States, the costliest of which was the polar vortex-related extreme cold that hit much of the nation in February. (REUTERS)

FL Property Insurers’ Litigated Claims up 14% in June:

Florida’s largest property/casualty insurers litigated 6,398 new claims in June, according to litigation management software provider CaseGlide. That number is a 14 percent increase from the insurers’ 5,364 new litigated claims in May. (INSURANCE JOURNAL)

AIG Employees Back to Workplaces in September:

American International Group Inc. (AIG) employees worldwide will return to their offices on Sept. 14, according to a memo from the company’s CEO Peter Zaffino. Requirements for mask use, social distancing and capacity at individual offices will continue to be determined by local regulations. (INSURANCE JOURNAL)

-- Compiled by KOREY CLARK