High profile cyber breaches have become more and more common, and can be costly events for the companies involved – sometimes running into the hundreds of millions in losses. While companies have been moving to secure their boundaries, insuring low probability high impact cyber events has been costly. In a bid to provide a facility to cover cyber risks, Marsh has launched Cyber ECHO.
Following a number of high-profile hacks, including the US Government as well as a range of retail sites, companies have been seeking to bolster their front line defences through a range of measures. On the back of the serious damages involved, among others to the reputation of brands, board members too are becoming more involved in pushing through security measures. Defending the front-lines is one measure available in a company’s toolkit to deal with cybercrime and its aftermath.
Having an insurance policy that covers damages across a range of domains is another. Large businesses seeking to insure their company from cybercrime damages above $200 million have been met with increased difficulty however, facing high premiums and a lack of cover. This is particularly an issue for those that handle healthcare and payment card data, with cybersecurity underwriters becoming more selective while rates more than doubled in the US over the past 12 months.
Marsh’s recent announcement sees the firm provide global organisations with “reliable” insurance cover through a new cyber risk offering called Cyber ECHO. The new proposition aims to provide stability to the excess market through “up to $50 million in ‘follow form’ coverage for clients of any industry sector and risk profile around the world.” The new facility contains a pre-priced option that allows insureds to reinstate policy limits, in the case that they find themselves in a cyber-event during the period of the policy that has the potential to exhaust their policy limits. Cyber ECHO is underwritten by Lloyd’s of London syndicates.
“While overall capacity in the cyber market remains abundant, the excess market is highly volatile,” says Bob Parisi, Marsh’s US Cyber Product Leader. “With Cyber ECHO, we are providing clients of all industry sectors with an efficient and more predictable excess coverage solution.”
One of the issues with cyber security policies has been the often disputed terms and conditions, following the relative immaturity of the market and the wide range of challenges created by adversaries. The new facility according to Marsh avoids ambiguities, and therewith, the sometimes costly disputes and/or delays in claims payments.
“Inconsistent wordings and varying terms and conditions between primary and excess insurance policies can contribute to significant delays in claims being paid and may even result in the failure to recover costs from insurers. Cyber ECHO helps to mitigate these issues, and is designed to aid in swift recovery from a loss,” comments Leslie Kurshan, Head of Product Development for the Financial and Professional (FINPRO) Practice at Marsh UK.