Information in this article is based on material shared during the 2016 Annual Meeting session of the same name, which included speakers Robert Sargent, MBA, CPCU, RPLU, of Tennant Risk Services, and Zack Schmiesing , MS, of Verisk Analytics.
Insurance products, like other products, have life cycles. And within these life cycles, products face inherent risks and exposure to criminal activity.
New commercial casualty coverages typically begin in the surplus lines marketplace, where there is freedom of rule, rate, and form. Cyber insurance is just such an evolving exposure, and a great deal of experimentation currently exists around it.
As this coverage matures, it will increasingly attract the attention of admitted insurers. Rules and forms will stabilize and be filed, especially for small and middle-market insureds. However, by its very nature, a significant portion of cyber insurance will always remain in the surplus lines market.
Insurance Services Office, Inc. (ISO) has recently developed advisory rules, rates, and forms on an admitted basis for cyber insurance. The panelists at this Annual Meeting session, President and Chief Executive Officer of Tennant Risk Services Robert Sargent, MBA, CPCU, RPLU, and Director of Thought Leadership at Verisk Analytics Zack Schmiesing, MS, concluded that about 80 percent of the current $1.5 billion market for this coverage is on a nonadmitted basis and that the movement to admitted paper will be very gradual, as the current marketplace has not achieved sufficient maturity for admitted insurance to be widespread.
To read the entire article and receive CE for CPCUs credits, visit The Institutes CPCU Society Knowledge Center.