Tag Archives: Willis

Bucking the Rating Trend

Broker Willis has just published its commercial insurance rate predictions for 2016.

What’s the outlook for insurance buyers?

Overall, the property/casualty insurance market continues to soften and Willis predicts further softening ahead, fueled by relatively benign losses and an oversupply of capacity from traditional and non-traditional sources.

For 2016, 10 lines of insurance–property, casualty, aviation, energy, health care professional, marine, political risks, surety, terrorism and trade credit–are expecting decreases.

In contrast, just five lines of insurance–cyber, employee benefits, errors & omissions (E&O), fidelity and kidnap & ransom–are expecting increases.

The main exception to the overall softening trend is in cyber and E&O insurance, Willis reports, where the growing threat of cyber intrusion and data theft is sending rates upward.

By how much?

For retailers with POS (point-of-sale) exposures and large health care companies, rate increases are up to an eye-opening 150 percent at renewal, with additional increases on excess layers.

In fact most buyers of cyber insurance are seeing primary premium increases of up to 15 percent, Willis says. For smaller organizations (with revenues less than $1 billion) lower premium increases are typical.

What about terms and conditions?

Willis observes that underwriting requirements continue to rise and cyber insurers are also increasing retentions, reducing capacity and exiting certain sectors.

Despite the reduction in capacity by some carriers, available limits in the cyber marketplace are around $350 million to $400 million.

Willis also predicts the marketplace for first-time buyers of cyber insurance (except for POS retailers and large healthcare organizations) will continue with relatively favorable terms, conditions and pricing.

Willis offers this single piece of advice to buyers of cyber insurance:

In approaching the markets, be ready to identify key investments in security and privacy protections over the past policy year that will help differentiate you from your peers.”

The I.I.I.’s new paper Cyber Risks: Threat and Opportunities sheds more light on the rapidly evolving market for cyber insurance.

Cyber Risks and the Fortune 500

Most U.S. listed Fortune 500 firms recognize that a cyber attack would cause serious harm or adversely impact their business, but many may be overlooking critical exposures, according to a new report by Willis North America.

For example, only one out of five firms mention cyber-terror (20 percent) as a factor, despite heightened emphasis on cyber-terror by the U.S. government.

And only six percent of companies mentioned that they purchase insurance to cover cyber risks, even though recent market surveys suggest significantly higher take-up rates.

The Willis Fortune 500 Cyber Disclosure Report, 2013, tracked organizations’ response to SEC Guidance issued in October 2011, asking U.S. listed companies to provide extensive disclosure on their cyber exposures.

The report found that some 88 percent of the Fortune 500 are following SEC Guidelines as of April 2013 and providing “some level† of disclosure regarding cyber exposures. Some 36 percent disclosed that the risk was “material† or “serious†.

However, some companies within particular industries that would seem to have exposures, were silent, Willis said.

Top three cyber risks identified by the Fortune 500 include:

1. Loss of theft of confidential information (65 percent)
2. Loss of reputation (50 percent)
3. Direct loss from malicious acts (hackers, virus) (48 percent)

Business Insurance has more on this story.

For additional information on the  cyber terrorism threat, check out  a just-published  I.I.I. paper on terrorism risk.