Will the Real Cyber Solution Please Stand Up?

Transcription

1 Will the Real Cyber Solution Please Stand Up? Alec Cramsie, US Group Leader for Cyber insurance - Beazley London Stephanie Snyder Tomlinson, National Cyber Sales Leader, Aon Risk Solutions Peter Mullen, Chief Executive Officer of Aon Captive & Insurance Management Mike Douglas, Captive Business Development, Aon Global Risk Consulting Tuesday March 7 th 11am

2 Session Description This session will address the current round up of how Cyber Liability Insurance is developing, what is and what is not happening in the cyber world, and how captives are helping move the cyber market and contribute to the coverage conversation. We will explore the market s response to this rapidly emerging risk category and will hear the perspectives from the Insurance Carriers, Captive Insurers and Insurance Brokers on where the market is headed.

3 Introductions Alec Cramsie The Insurance Carrier s View US Group Leader for Cyber insurance - Beazley London Peter Mullen, Chief Executive Officer The Captive Manager s View Aon Captive & Insurance Management Stephanie Snyder-Tomlinson, - The Insurance Broker s View National Cyber Practice Leader, Aon Risk Solutions Mike Douglas - Moderator Captive Business Development, Aon Global Risk

4 The Insurance Carrier s View Cyber liability has exploded into the consciousness of Board rooms around the world. Demand for capacity and coverage with responsive conditions has led to a wide variety of policy forms and coverage options. Alec Cramsie of Beazley London is the US Group Leader for Cyber insurance and will provide his insights on what coverages are currently available in the marketplace currently and what is expected for the future to meet the growing demand.

5 The Captive Manager s View In addition to the traditional markets, captives have been used to provide cover for Cyber Liability for their parent companies. This area of the market has had a modest beginning with only around 1% of all captives writing the line, but this is increasing rapidly. Peter Mullen, Chief Executive Officer of Aon Captive & Insurance Management will discuss how captives can help move the cyber market and assist their parent companies in financing this risk in the most efficient manner.

6 The Insurance Broker s View When Aon published its biennial Global Risk Management Survey in February of 2015, Cyber liability ranked at number nine of the top ten risks on the minds of Risk Managers. In the intervening 11 months we have seen the demand for Cyber coverage skyrocket and it is expected that at the next report it will be at number one with a bullet! Stephanie Snyder-Tomlinson is the National Sales Leader for Cyber Insurance for Aon Risk Solutions. Stephanie will provide her view of the rapid pace of Cyber market evolution and share her vision on how the market will develop, innovate and THINK BIG to meet buyer needs.

7 Man s Propensity to Steal Knows No Bounds! Professor Mike Irwin Redbridge Technical College Insurance and Fraud Class October 1981

8 Old Breaches In The News Home Depot TARGET Neiman Marcus ebay SONY JP Morgan Chase Michaels Anthem The Pennsylvania State University Sands P.F. Chang s Sally Beauty Supply United States Office of Personnel Management White Lodging State of California Department of Motor Vehicles

9 The New Face of Cyber. Two days before Christmas in 2015, hackers attacked the power grid in the Ivano-Frankivsk region of Ukraine with a "virus" that had erased the programs that engineers use to monitor equipment. For six hours, 103 cities were hit with power outages and another 186 cities were left partially in the dark because devices that route power and change voltages had been disconnected from the grid.

10 Dealing with Cyber Risk It s a Process!

11 First Understand the Risk Understand the top risks to your company and communicate to management the risks that are and are not insurable. If not insurable, then identify alternative options. Senior Management Legal Department Understand your contracts with your customers. What risks are your company assuming? What insurance are you required to maintain? Risk Management Know and meet regularly with your Information Security / IT Team. Understand incidents or near misses. Information Security Broker / Insurer Review your risks with your insurance broker and insurer continually. Insurance coverage is negotiable.

12 How Does Cyber Analytics Help? Provides guidance on the financial impact of decisions about Cyber risk and insurance Gives organization-specific advice to evaluate various insurance program structures Provides quantitative results and can be used in addition to traditional benchmarking Helps determine the impact of program structure on Retained losses Insurance recoveries Losses in excess of insurance coverage Premium value 12

13 2016 Cyber Exposure Trends IoT - The Internet of Things Smart workplaces Reliance on technology & increasing automation Cloud Computing / Big Data Analytics Increased use of outsourced service providers Cloud provider risk oversight/security Social Media Network security, privacy, and social engineering Phishing / Spear Phishing Regulatory (Domestic and International) 1

14 What is Available? Current Snap Shot of the Cyber Market

15 DOMESTIC AIG Allianz Arch Argo Aspen AXIS AWAC BCS Beazley Berkshire Hathaway Chubb CNA CV Starr Endurance Nationwide Hartford HCC Hiscox Ironshore Liberty Mutual QBE RLI SCOR Re Swiss Re Travelers XL- Catlin Zurich Global Cyber Insurance Marketplace LONDON Aegis Allianz ANV Ascent Aspen AIG Lexington Berkshire Hathaway Barbican Beazley Brit CFC Chubb HCC Hiscox Kiln Liberty SCOR Swiss Re Axis Zurich Munich Re Novae BERMUDA (Excess only) AIG Chubb Markel Argo Aspen AWAC AXIS Endurance Iron-Starr XL - Catlin Global Indemnity 15

16 Scope of Cyber Insurance Coverage Liability Sections First Party Sections Expense/Service Sections Defense Costs + Damages + Regulator Fines Failure of Network Security Failure to Protect/ Wrongful Disclosure of Information, including employee information Privacy or Security related regulator investigation All of the above when committed by an outsourcer Wrongful Collection of Information (some policies) Media content infringement/ defamatory content Insured s Loss Network-related Business Interruption Extra Expense System Failure Business Interruption (some policies) Dependent Business Interruption (some policies) Intangible Asset damage Expenses Paid to Vendors Crisis Management Breach-related Legal Advice Call Center Credit Monitoring, Identity Monitoring, ID Theft Insurance Cyber Extortion Payments 1

17 State of the Cyber Marketplace Variation based on size, industry & geography, but below is general summary: Capacity Coverage Claims & Losses Capacity is fluctuating in 2015 both domestically and abroad - While there are over 67 unique markets that can provide Professional Liability and/or Cyber capacity, with new entrants in 2015; some markets have recently reduced capacity or have pulled out all together, while others have entered or increased their capacity - Markets exist domestically (primary and excess), the UK (primary and excess) and Bermuda (excess only) - Of the available markets, there continue to be 4-5 Tier I markets for large complex accounts Coverage continues to expand in both breadth and limit availability for middle market accounts, but not large accounts - Carriers continue to differentiate their offerings with new/enhanced coverage components (Goodwill Coupon, Breach Response Services, PCI Coverage, etc.) - Breach mitigation coverages continue to expand to meet clients needs, including higher limits of coverage and the availability of coverage through a tower Stronger data is being gathered as more breaches are reported - There continues to be numerous breaches reported with additional reports tracking costs of the breaches - Policies are responding, particularly to the breach mitigation, allowing better tracking of claims payments - Much more focus on IT security calls and IT systems relating to Point of Sale ( POS ) systems Retentions Pricing Retentions remain stable and varied for middle market accounts, but some material increases for large accounts - Retentions of all levels are available in the market, but vary based on industry class, revenue and unique exposures, with recent market pressure to increase retentions, sometimes significantly - Adjusting retentions can lead to more coverage/sublimit flexibility Pricing continues to trend upwards - Pricing continues to rise in the wake of significant breaches, particularly in the affected industries increases of 100% - 400% over expiring are not uncommon - Renewal premiums continue to increase even for insureds with no change in exposure profile 1

18 What is s Good Strategic Market Approach? The key to a successful go to market strategy is to differentiate our clients. Placement Strategy Discussion Submission creation Coverage Priority Matrix Underwriting meeting preparation Market meeting or conference call Obtain worldwide market access Placement strategy discussion 21 days Gather underwriting information 7 days Create coverage specifications via Priority Matrix days Insurers evaluate submission / Underwriting Meetings days Negotiation Period Time will depend upon size of the tower New Program Incepts 18

19 Questions from the Floor