Cyber-insurance buyers who do not have the necessary risk-reducing security measures in place may face higher interest rates, renewals or reductions by insurance companies, Amwins Group Inc. said in a report on Wednesday.
Charlotte, North Carolina-based wholesaler said on top of rising interest rates and more restrictive terms, the lack of multi-factor authentication among policyholders is proving to be a "challenge" in securing cyber liability coverage.
"Going forward, the market will require insureds to demonstrate that they have the necessary risk mitigation controls in place, such as multifactor authentication for remote access, email and / or privileged IT accounts, and backups in the cloud (or otherwise segregated from the network). "," Amwins said in its second-quarter / third-quarter 2021
"Currently, we see insurers putting pressure on the collateral controls that insureds use to better reduce risk exposure," it says.
Special insurance markets have experienced some of the most difficult market conditions most have ever seen under for the past two years, James Drinkwater, president of Amwin's and Amwin's Brokerage, said in the report 59002] “The market continues to be dynamic. Although we have seen a slowdown in the interest rate environment in some areas, we are seeing dramatic increases in others, says Mr Drinkwater.
All professions feel the effects of a tough insurance market, with cybercrime continuing to experience the greatest degree of change, Amwins said.
Very few markets are willing to offer $ 10 million limits for cyber risks. "Most accounts that bought a $ 10 million limit from a single operator in 2020 now see those limits at $ 5 million – with pricing increasing, sometimes dramatically, on renewal," the report said.
Directors and officers have experienced some degree of flattening, but this may suddenly change as activity around mergers and acquisitions and specialty companies increases, Amwins said.
For the D&O market as a whole, renewals see increases between 9% and 12%, higher for accounts with losses or greater risk exposure.
In the real estate market, capacity remains sufficient, with availability depending on risk perception and interest rates. Too much and surplus insurance companies are more willing to keep interest rate hikes to 10% in more desirable industries, according to the report.
However, the Florida condominium market sees interest rate increases of 15% to 30% as the best case scenario, following the Champlain Towers tragedy.
The remaining four months of 2021 will be a "bellwether" for disaster-prone operations in a year that has already been active in climate-driven claims, Amwins said.
The E&S market remains responsive with surplus premiums increasing by 22% during the first half of 2021.
In surplus accidents, public entities, housing construction and housing remain some of the more challenging sectors, along with risks exposed to forest fires, according to the report.
"Keeping track of this tough accident market will require dealers and brokers to provide complete submissions with detailed risk characteristics and come well before renewals," said Amwins.