The insurance market has continued to harden year-to-date, though the pace of rate increases has slowed somewhat from 2020. We are seeing the most stress in higher-risk property placements, high-hazard casualty and excess liability, and financial lines including D&O, employment practices liability, and cyber insurance. The key long-term drivers of market tightening – especially the effects of climate change and the increasing costs of litigation – appear poised to continue. Other factors, including macroeconomic uncertainty and lower-for-longer interest rates, are showing signs of receding. A full copy of our market update, including additional commentary across most lines of coverage, can be found Here.
Spotlight on Cyber Insurance Trends
With events in recent months including the Microsoft Exchange vulnerability, the CNA Insurance ransomware attack, and the Colonial Pipeline shutdown, cyber risk has become increasingly salient for executives and business owners. Since the start of the COVID-19 pandemic, there has been a notable increase in the frequency of cybersecurity incidents. One report from the FBI’s Internet Crime Complaint Center shows a 70% increase in complaints for 2020 vs. 2019. While this is partly related to the rise of remote work, it also reflects the increased success of organized hacking outfits and a deeper black market for illegally obtained information. The rise of cryptocurrencies has emboldened hackers by making it easier to collect ransoms and sell information while evading law enforcement.
In the face of a growing cyber threat and growing demand for risk management options, the cyber insurance marketplace is undergoing significant change. On the one hand, insurers recognize that cyber insurance will be a critical long-term product and are striving to offer broader coverage and distinctive service. At the same time, the economic and systemic risk of cyber threats is growing dramatically, leading insurers to more carefully underwrite their portfolios. We have seen certain types of coverage pull back, particularly for ransomware and business interruption, and we’ve also observed carriers taking a more proactive approach to monitoring their insureds’ vulnerabilities and making security recommendations. Because the threat environment moves much faster than the typical one-year policy term, the future of cyber insurance is likely to involve closer partnership between carriers and insureds to maintain protections and address risks.
While cyber insurance is not a substitute for sound cybersecurity practices, we continue to advise clients to incorporate this coverage into their overall risk management program. Our team is happy to discuss your specific risk and coverage needs.
Important COBRA Changes
The American Rescue Plan Act (ARPA), signed into law March 11, 2021, provides a 100% subsidy of premiums for employer-sponsored group health insurance continued under COBRA and similar state continuation of coverage (mini-COBRA) programs. ARPA subsidies cover the full cost of COBRA or mini-COBRA premiums from April 1, 2021, through Sept. 30, 2021, for employees who lose group health insurance due to an involuntary job loss or reduction in work hours. The subsidy applies to people who are still within their original COBRA or mini-COBRA coverage period, for the length of that coverage period. Coverage under federal COBRA is available to individuals eligible for the subsidy even if they declined or dropped COBRA or mini-COBRA coverage earlier.
Contact Lisa Green more for information.