Thoughts about Specialty Insurance for 2011 – Cyber/Privacy products

Specialty insurance is always interesting – at least for those of us that are fascinated with the high degree of innovation in this fast changing insurance segment.

Here’s what 2011 looks like from here, for Cyber/Privacy products:

  • Privacy is the key word for prospective insureds, and thus, their agents and brokers; look for more products to cover only the privacy risk.  We’ll be hearing a lot more about privacy insurance, and less about cyber risk insurance (though both are needed, and indeed are hard to separate).
  • Post-breach (aka remediation) claims will increase, both in frequency and severity.  Carriers will have a tough time making an underwriting profit as a result.
  • Increasing numbers of carriers will be offering cyber/privacy products, making it tough to achieve rate adequacy (see above).
  • As a result, carriers will put more emphasis on claims cost control, negotiating with remediation service providers for lower rates and more efficient delivery. NOTE: insureds can expect fewer choices amongst insurer-approved providers.
  • The middle market will be buying a lot more of this product (our recent study of the middle-market prospects for cyber/privacy insurance indicated that 25% of the respondents planned to buy within the next 18 months).
  • Distinguishing between products will continue to be a challenge for agents and brokers; wholesalers will be key to getting the right product into the insurance portfolio of middle-market insureds.
  • Brokers will add to their cyber/privacy bench depth as client demand outstrips resources.
  • As this product line grows, finding enough technical skill to underwrite and manage claims will constrain growth.  Where will this talent come from?

 

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6 responses to “Thoughts about Specialty Insurance for 2011 – Cyber/Privacy products

  1. Nice post – one of the things we are heavily pushing in the UK is cover for user generated content. Comments reviews forum posts – if left open can really leave website owners open to slander claims.

  2. Glad to hear that; its needed.
    Take a look at our IP and Media Liability insurance market survey for more (which will be updated this April).
    How do you compare the UK market to say the U.S. market for (new) media liability insurance?

  3. Oh great! I will have a look over your IP and Media Liability insurance market survey.

    I think that when comparing the US and UK markets I feel the demand for this type of cover is higher in the US. This is very much a new type of cover in the UK and we spend allot of our time educating and making websites owners aware that this type of cover is available.

  4. Pingback: Internet Evolution - Jart Armin - Hackers Take Note: Cyber-Insurance Is on the Rise

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