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Cyber exposure compounds risk for agencies, brokerages, and their clients
It's always been challenging to determine a client's risk exposures and to understand the extent and limitations of coverage under various policies. Now, agents and brokers must become at least conversant in cyber risk and cyber insurance, both for their clients and their own enterprises.
Cyber insurance has a unique history as a line of coverage. It originated in the specialized world of professional liability coverage, where knowledgeable practitioners negotiated customized policies, but since has become an important-but not standardized-coverage for thousands of organizations with widely varying levels of IT expertise and infrastructure.
Although steps have been taken in recent years to introduce greater conformity in cyber insurance provisions, cyber policies still vary greatly in the range of losses that they cover and the wording they use to define loss exposures and events.
Cyber insurance is, therefore, adding a whole new layer of complexity to an agent's or broker's errors and omissions (E&O) exposure and insurance coverage.
"Cyber exposure is getting more and more attention, and it appears that virtually every business has the exposure," says Mark Angelucci, resident senior vice president and leader of the E&O segment of Utica National Insurance. "Agents are well advised to offer it, but as the cyber insurance market evolves, the carriers, coverages, and terms and conditions are in flux. It's a challenge for agents to keep up."
"Agents and brokers must be able to talk intelligently to their insureds about the digital and technological exposures they have," says Steven Anderson, vice president and product executive for privacy and network security for QBE North America. "They must, at a bare minimum, understand the 'what' and 'why' of the coverage." That said, producers should not necessarily expect a big payoff from an investment in understanding cyber exposures and insurance options.
"Cyber insurance today is very much the way employment practices liability insurance (EPLI) was 15 years ago," says Jason Rogers, senior vice president of Gallagher Affinity Insurance...