Marsh: Premium for cybercrime Insurance on the rise

27 October 2015 Consultancy.uk

The cyber security insurance industry is seeing increased demand as more and more high profile cyber-attacks are embroiling companies in controversy and costing them millions of dollars. While take-up and liability limits continue to rise, as well as the kind of insurance products available, premiums are also rising quickly, research by Marsh shows. This is especially the case in the retail and health sectors that have seen a spate of high profile high cost breaches in recent years.

Cyber-attacks have been steadily increasing in severity and scope in recent years. This year so far has seen a number of breaches potentially affecting hundreds of millions, including among others, the 37 million records stolen from AshleyMadison, 76 million records stolen from JP Morgan Chase, and 145 million customer records copied from eBay’s database. The rise in the number of relatively devastating attacks has come with a rise in the costs, and companies are sometimes paying tens and sometimes hundreds of millions of dollars in damages.

In a bid to protect themselves from further damages, companies are increasingly seeking to insure themselves across various domains of cyber security; from insuring against data loss due to network penetration to lost business from system outages from DoS attacks. In a report released by Marsh, titled ‘Benchmarking Trends: As Cyber Concerns Broaden, Insurance Purchases Rise’, the subsidiary of Marsh Mclennan & Company explores how US businesses are changing their relationship with cyber insurance – covering the years 2013 and 2014.

Cyber insurance take-up and growth by industry

Take-up increasing
The take-up of insurance policies across all sectors explored by the consulting firm is up on the previous year. The largest rise in take-up is in the hospitality and gaming industry, jumping 69% from 16% of businesses surveyed to 24%. Education also significantly increases their investment in cyber security coverage, up from 22% in 2013 to 32% in 2014. Healthcare remains the most insured segment, up from 45% in 2013 to 50% in 2014. Communication, media and technology sees the smallest increase of coverage, up from 11% to 12%. The manufacturing industry is the least concerned about cyber security coverage, the sector which saw strong growth of 35%, only increased its coverage from 6% to 8%.

The reasons for increased levels of policy purchases stem from a variety of demands. Some are responding to mandatory requirements from boards for reputation protection, while other fear loss of business following a disruption. In response to increasing demand, insurers have been rolling out more complex products to protect more complex business areas, including for instance, cyber-induced bodily injury and property damages.

Cyber liability for companies above a billion

Increasing limits
The increased take-up of services across the board is also seen in the liability limits purchased by companies with more than a billion in revenues. In all industries, the limit has increased from $27.6 million to $34.1 million. Communication, media and technology (up from $40.3 million to $43.7 million) and services (up from $40.4 million to $41.2 million) have the least liability increase. Healthcare to the contrary, more than doubled its liability limit to $26.4 million, while power and utilities have increased their liability from $35 million to $44.4 million. Liability limits for retail and wholesale increased around a third, up from $20.8 million to $31.4 million.

For companies across all segments, the average limit sits at $12.8 million, up from $11.1 million a year earlier. Companies for the most part have seen increases in their limits, however lower in general than in the above one billion segment. Education providers have seen almost no increase in coverage, while services has even seen a decrease of a million in coverage between 2013 and 2014.

Cyber liability total limit for all companies

Challenging market
Whereas limits have been increasing, insurers have become considerably more critical of certain segments. Particularly retainers are having difficulties securing coverage in excess of 200 million from aggregate sources. Premiums in some sectors, where the risks are the greatest following high profile breaches, have increased significantly. In healthcare for instance, contracts up for renewal have in some instances been tripled in price, while in the retail sector an average 32% increase has been booked. “Some companies are struggling to find the money to buy the coverage they want,” comments Tom Reagan, a Cyber-insurance Executive with Marsh & McLennan Company’s Marsh Broker Unit.

Insurers are also becoming more active, requiring companies to introduce more than just clear policy directives around cyber security readiness, instead asking companies about their use of encryption technology and whether they have formal incidence response plans for protecting data and vendor networks and whether those systems are functional in real-world-testing.

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RSM sells controversial UK wealth manager out of administration

26 March 2019 Consultancy.uk

RSM has overseen the sale of UK financial advisory firm Mount Sterling Wealth out of administration. The company had fallen into insolvency earlier in March, but has been purchased by Quilter Private Client Advisers for an undisclosed fee.

Mount Sterling Wealth is a York-based financial advisory firm, offering financial planning and wealth management services to clients from offices in Mayfair and North Yorkshire. Founded in 2010, the firm has endured an acrimonious relationship with the UK’s businesses community, having been formed by Scott Robinson to move his clients from an old firm, after being sued for advising on investments which failed and were not covered by professional indemnity insurance.

Robinson was allowed to continue working as a financial adviser by the Financial Conduct Authority (FCA), despite being ruled against in court and avoiding further legal action after liquidating his company. The controversial decision of the regulator caused Conservative MP Kevin Hollinrake to state the FCA needed "to take a long, hard look at itself" for allowing Robinson to continue trading.

RSM sells controversial UK wealth manager out of administration

That comment was prompted by the case of Hollinkrake’s Thirsk and Malton constituent, Andy Mohun-Smith, who according to the Yorkshire Post, lost £2 million after trusting Robinson (one of Mount Sterling Wealth’s two Directors alongside David McLaughlin). Mohun-Smith also claimed the saga had a “devastating” impact on his life and health, with the stress involved “undoubtedly a major factor” in the break-up of his marriage.

As a result of the chequered history of one of its Directors, there was little sympathy expressed for Robinson’s firm when it fell into administration in March 2019. Mount Sterling Wealth was placed into administration following historic financing issues, appointing Jamie Miller and Gareth Harris of RSM as joint administrators to oversee the sale of its assets. The York-based firm had around £100 million in assets under administration.

Mount Sterling Wealth has since been sold out of administration, in a deal that preserves both jobs and the continuity of service for its clients. The financial planning and wealth management practice was sold to Quilter Private Client Advisers for an undisclosed fee.

Jamie Miller, RSM restructuring advisory partner and joint administrator, said: "I’m pleased to confirm that the deal preserves all jobs, ensures continuity of service for the company’s large portfolio of private clients and business owners and should result in significant returns for both secured and unsecured creditors which is an excellent result in the circumstances."

Commenting on the acquisition, Dominic Rose, Strategy and Acquisitions Director at Quilter PCA, said, “Mount Sterling Wealth was placed into administration following some historic financing issues. RSM was appointed joint administrators and the business was then sold to Quilter Private Client Advisers. Mount Sterling Wealth’s portfolio of clients will now be serviced by Quilter PCA’s by London, Chester and Shipley offices ensuring continuity of service. In addition, one adviser will join Quilter PCA.”