Cyber Liability continues to evolve and is now the hardest of the Property Casualty markets. We continue to focus on the Middle Market Cyber Security changes, which have been significant over the past 2 years. The changes due to the Pandemic brought us into the remote workforce era, and the cyber attackers reacted to this by increasing their efforts, especially on middle market companies.
According to a cross-industry mid-market security study by Coro, mid-sized businesses are 490% more likely to experience a security breach since 2019. Smaller companies lack the budget, resources, and expertise to protect themselves.
According to the 2022 RSM and the U.S Chamber of Commerce US Middle Market Business Index Cybersecurity Special Report there is evidence that middle market leadership has begun to implement better controls over the past 12 months and there is some improvement in the number of data breach events. According to MMBI data 22% of middle market companies experienced a data breach, a sizable drop from 28% in the 2021 survey, however, 72% anticipate unauthorized users will attempt to access data or systems in 2022, a rise from 64% in 2021.
The insurance marketplace has responded sharply to the continued increase in cyber risks. Most carriers have strict requirements that Multi-factor Authentication be implemented by insureds as a condition to even consider quoting. The industries direct premium written has doubled in five years from 2015 to 2020 and rising 75% in 2021 according to A.M Best’s Cyber Report. According to the MMBI research, 67% of respondents saw an increase in cyber premiums. Carriers are tightening not only pricing, but insureds may also face the following issues:
- Reduced limits
- Increased retentions
- Sub-limits and or coinsurance on certain coverage parts
- Coverage term changes
Armada Risk Partners can help
If you have cyber intrusion coverage, it may be time for a comprehensive coverage audit. Carriers are continually modifying their policy coverage forms and making coverage improvements as this coverage continues to evolve. Every cyber policy form is different between carriers. So, it’s important to have someone who is well-versed in understanding the coverage nuances and is keeping abreast of the changing insurance marketplace. Your current policy may not be addressing the latest enhancements.
If you have not yet acquired such coverage—and many third-party supplier contracts now require it– find someone that can work with you to develop the right coverage that best meets your business needs.
Mary Benko is part of the Commercial Property and Casualty team at Cleveland-based Armada Risk Partners, an all-risk insurance brokerage. A Senior Vice President/Analyst with more than 30 years of experience, she focuses on assisting clients in understanding their insurance needs through a thorough review of their current insurance coverages, addressing coverage gaps and changing market conditions.
