Only a few years ago, cyber insurance was not the necessity it is today. As individuals and organizations alike emerge from the COVID-19 lockdown, cyber-crime events are increasing, sometimes consisting of enormous ransom requests and insureds are finding it difficult to secure adequate coverage at appropriate rates.
While the cyber insurance market is said to be in a cool down period, according to the Wall Street Journal, the rise in demand, push for new products and tightened carrier capacity continues to put pressure on insurance professionals in this space. Fortunately, MGAs can use this opportunity to examine the issues facing cyber insurance more closely and how they can provide solutions.
Managing premiums: Compared to the fourth quarter of 2021, cyber insurance premiums increased by nearly 28% on average in the first quarter of 2022 as reported by the Council of Insurance Agents & Brokers (CIAB). As carriers restrict capacity on cyber insurance, insurance professionals will have to look to multiple carriers to manage premiums. Fortunately, MGAs regularly work with multiple carriers in more localized, independent markets, making them more attractive to those seeking help in this endeavor. As such, MGAs may consider putting more resources into underwriting and paving an entry point for insurers to new markets.
Promoting loss control: Today, the industry knows more about cyber risk than it did pre-pandemic, but as a comparably new offering, the cyber sector still struggles to offer historical data. To mitigate risks, insurers are making requirements stricter including mandatory loss control strategies, rigorous application processes and extensive security risk assessments. Being able to provide an insured with effective loss control will assist in securing lower rates. Multi-factor authentication, regular security scans and a robust IT program are a few strategies that are quickly becoming requirements by insurers.
MGAs are in a unique position to innovate in specific insurance sectors, which includes cyber insurance. As cybercrime becomes increasingly sophisticated, the insurance industry will have to keep up with demand. MGAs can be a great source to bridge the growing cyber insurance gap.