Brokers signal that cyber insurers need security measures and higher premiums

Insurers continue to take a hard line when it comes to underwriting and pricing cyber coverage. While commercial line prices rose 8.9% overall in the third quarter, cyber premiums rose 27.6%, according to The Council’s Commercial P&C market index for the third trimester.

Commercial online brokers interviewed told the Council that a key driver of the cyber surge is the increase in cyberattacks, including ransomware, phishing and social engineering attacks. But they also indicated that cyber has been undervalued in the past, so they see this as a period of adjustment in terms of premium pricing.

Brokers in the survey noted that cyber insurers in particular are more disciplined in their underwriting, calling for tighter loss controls and looking more closely at clients’ loss histories.

Moreover, according to some respondents, their customers could not obtain any cyber coverage if they did not implement the specific cybersecurity measures requested by the carriers.

Ken A. Crerar, president and CEO of The Council, noted that there are things customers and brokers can do to mitigate price increases.

“Brokers and clients who take proactive measures against cybersecurity risks by implementing stricter loss controls, such as requiring multi-factor identification for access to company systems and training employees, will have a distinct advantage when it comes to finding robust and affordable cyber cover,” Crerar said.

Overall trade market

Overall, commercial insurance prices rose for the 16th consecutive quarter across all account sizes to 8.9%, which was up slightly from the average increase of 8.3% in second trimester. Large accounts saw the largest increase of all account sizes, at 10.4%, while prices for small accounts increased the least, at 6.2%.

Prices rose for all lines of business except workers’ compensation. After five quarters of slight increases, workers’ compensation premiums have started to fall again, to -0.3%, according to the Council’s survey.

Prices also rose for directors and officers, umbrellas, commercial properties and employment practices, according to the survey:

Brokers said they have seen an increase in claims in certain sectors, including commercial property, commercial auto and workers’ compensation, as more employees return to the workplace.

Nearly 80% of respondents said “driving organic growth” was a top priority in Q3 2021, while 67% also cited “recruitment and talent development.”

“We have to be creative, hire people from other places who can work remotely,” said a broker at a major North West brokerage. According to another from a large Midwest company, “The ease for employees to change employers [while] virtual work can be either a problem or an opportunity for brokers. »

Source: The Council

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