Cyber Market Insights with McGriff
Sylvia B. Menetre, CIC, ARM, Vice President, McGriff Insurance
The cyber insurance industry is experiencing what many nascent marketplaces, particularly in technology, experience — a drastic market shift fueled by evolving threats.
We’ve seen a dramatic increase in ransomware attacks against companies and organizations in the past two years. Threat actors are bolder and the attacks, while growing in complexity, are easier to carry out than ever before. Seven- and eight-figure ransom demands are now common. Complicating things further, even the less skilled hacker can wreak havoc now through the emergence of Ransomware as a Service (RaaS) tools.
As attacks have been on the rise, so have the number of claims to insurers in this space. According to Guidewire, ransomware attacks increased 40% in the first three quarters of 2020, compared with the same period in 2019, totaling about 200 million incidents globally. Ransomware attacks in the United States increased 139% year over year, almost four times the global rate.
As a result, the effect on loss ratios has been significant, leading to higher premiums across all sectors-in the 30% to 100% range-and even the novel possibility of an outright declination. Cyber insurance markets are narrowing their exposure, and a few are refusing to remain on-risk for certain industry classes. Policyholders can expect to complete a detailed ransomware underwriting application as underwriters closely examine cybersecurity controls (particularly multi-factor authentication for networks), email and privileged access. Insurers are also bringing back sublimits for specific insuring agreements or co-insurance to moderate their contribution to losses. Several insurers are reducing their total limits on many program towers, and excess carriers are insisting on minimum premiums levels as they consider even higher attachments points as equally exposed to major loss.
The coverage accompanying these premium surges often remains as expiring, or with minimum enhancements. Coverage expansions are more likely to be premium-bearing, and certain extensions will not be available to all clients.
McGriff continues to monitor the technology ecosystem, especially as businesses adopt new web-enabled solutions to enhance customer engagement, improve work flows and production, and leverage innovative hardware and software products to meet performance targets. But new technology is always accompanied by new risk, and not all potential consequences can be fully understood until implementation. Cyber policy language will need to keep up accordingly. Advancements in the next few years will greatly influence coverage and underwriting
We expect 2021 and into 2022 to continue to be a volatile market, but with pruning comes positive and sustainable growth.
About Sylvia Menetre
Sylvia serves as a Professional Liability Resource and is the relationship manager for her clients. She works at a strategic level to develop a service plan to meet their business goals. Sylvia is able to work with the client to evaluate exposures to risk, discuss risk control/transfer options, market an appropriate insurance product and plays the key role in the presentation and explanation of critical details.
Ms. Menetre has in excess of 25 years of experience in agency account management, production, marketing and corporate risk management to a broad spectrum of clients including Real Estate, Manufacturing, Professional Services and Nonprofit. Sylvia’s ability to work with a widely diverse group of clients in terms of both size and industry type, gives her a unique perspective among her peers.
She has expertise and accomplished success in all lines of Property & Casualty including Professional and Executive lines such as E&O, Cyber, D&O, EPL, Fiduciary Liability & Crime.
She is known for her attention to detail and ability to compare key coverage components to assist her clients in making decisions in risk transfer options.
Sylvia participates in industry panel discussions and serves as a presenter at seminars and webinars.