How do Cyber Insurance Brokers Operate in the Current Market?

Setting realistic expectations in a tightening market is becoming increasingly complex, especially in light of growing premiums and carrier regulations. While many brokers are concerned that open communication regarding market volatility may scare their clients into the arms of another, less honest broker, it is nevertheless critical to set realistic expectations for insureds.

Fremont, CA: The cyber insurance landscape has shifted dramatically in recent years. Insureds wishing to renew their policies will be surprised by new volatility requirements, higher rates, and unpredictable, fast-moving trends. While ransomware, systemic risk, and payroll issues are among the most pressing worries for carriers, the market is volatile and can change anytime.

The Confusion of an Ever-Changing Cyber Risk Landscape

Given the ever-changing nature of cyber risk, brokers find it nearly impossible to obtain a snapshot of a client's exposures. For this reason, continuous underwriting, which certain insurers have pushed for in other insurance products, is impossible for the cyber liability policy. Simply put, many cyber brokers currently at total capacity cannot constantly appraise and remarket their accounts in response to changes in policy terms, price, and real-time policyholder data. Furthermore, allowing a carrier to sit within a company's network and monitor their systems in real-time violates the fundamental DNA of cyber hygiene, as granting network access to third parties entails inherent dangers and potential responsibility.

Brokers should instead encourage their clients to implement continuous monitoring, but not for the aim of re-underwriting and remarketing the account. Instead, it should be a process that allows insureds to recognize and handle concerns rapidly, assisting the end policyholder in remaining secure. It will also allow for a faster renewal when the policy's term ends. Continual monitoring benefits all parties involved: insureds minimize the chance of an attack, insurers reduce the risk of financial impact, and brokers reduce their burden and time spent preparing customers for policy preparation.

The Need for Effective Communication for Cyber Insurance Specialists

In a hardening market with increasing threats, brokers should maintain positive working ties with their clients' IT departments. Many cyber insurance brokers will learn that what carriers believe to be a priority is not often what IT wants or can do with their limited budgets and resources. As a result, brokers should incorporate IT into discussions and decision-making as much as feasible.

Brokers can anticipate playing an active part in their clients' cyber hygiene until the cyber liability policy fully matures. Not only are products and services more difficult to obtain right now, but many insureds are not adequately onboarded once they purchase a policy. Brokers can differentiate themselves from their competitors by ensuring their clients understand what their insurance can do. Brokers can elevate a policy off the page rather than simply listing services in black and white on paper.

This is especially important in the case of an attack. When a client experiences a cyber incident are frequently placed in a completely unexpected scenario and turn to their brokers for advice on reporting, next steps, and expectations. Cyber insurance brokers, in turn, will need to rush, acting as the lubricant between the gears and ensuring that the client receives maximum benefit from the policy they have paid for. As a result, brokers must understand the policy more thoroughly than the insured; with this knowledge, brokers may advocate for their clients and offer clarity on the resources and cash that can be retrieved.