Cracking the Code: The Cyber Coverages You Need to Know Now

content_abstract-cyber-lockThis fall, Equifax revealed that hackers had stolen more than half the U.S. population’s Social Security numbers earlier in the year.

Beyond the public fallout, the breach will have significant effects on industries throughout the country—not least of all insurance. But in a market as young as cyber, it’s still too early to predict the full impact of the Equifax breach.

“We’re still in the infancy of this coverage,” says Karen Johnston, technical commercial consultant—staff underwriting at Nationwide Insurance. “With cyber, we really don’t have the aggregation of data like we do in the other lines of coverage. There could be large aggregate losses stemming from one major event. There are a lot of unknowns.”

But while “Equifax may have impact on larger account premiums,” says Anthony Dagostino, global head of cyber risk at Willis Towers Watson, “it’s going to have more of an impact on underwriting scrutiny. You’ll see more questions around patch management and asset protection.”

For your average small to midsize business, then, “it’s still going to be competitive,” says Dagostino, who notes that at least 60 carriers are currently vying for cyber business. “The underwriters see that as more of a quantifiable risk—these types of companies usually aren’t holding millions and millions of records.”

“Pricing will likely decrease in the middle market, depending on how quickly coverage expands in the next six months,” agrees Dan Burke, cyber and technology product head at Hiscox USA. “It’s a little hard to say, because in the cyber marketplace, the coverage is expanding rapidly. As that continues to happen, that helps dictate pricing a little bit.”

“There’s always going to be that next coverage that carriers are going to put out there to try to differentiate themselves,” agrees Eric Cernak, vice president at Hartford Steam Boiler. “That will command additional premium.”

Read More about Distinguishing Coverage Options in Independent Agent Magazine.

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