Cyber risks a top concern for majority of D&O underwritersPosted On: Mar. 2, 2015 12:00 AM CST
A total of 60% of directors & officers underwriters consider a company's cyber security a major risk when it comes to underwriting a D&O policy, says a brokerage's survey.
The survey by Leesburg, Virginia-based AHT Insurance of 75 underwriters representing 30 different insurers was released last week as part of white paper, “2015 State of the D&O Market.” The remaining 40% view cyber security as a minor concern.
The survey also asked underwriters what questions they might ask a company in 2015 that they did not ask in 2014. Responses included: Discuss your internal controls and safeguards regarding cyber security and if you insure that on a separate tower; Do you currently carry cyber insurance, and how robust is your information technology security; and what is the company doing to address its cyber exposure.
A total of 57.5% of the underwriters say they expect primary D&O rates to remain stable in 2015, while 37.5% anticipate a 5-10% increase. Virtually all said excess rates would either remain flat, or be down up to 10%.
“It appears that 2015 will continue to follow a similar pattern to 2014 regarding D&O rates,” says the paper, which was written by Michael Tomasulo, Newark, New Jersey-based principal and management liability practice leader at AHT.
“It is a fairly safe bet that the primary layer will continue to remain flat or receive small percentage increases, while the excess layers may continue to feel pressure and potentially see rate reductions due to continued expanding capacity.”
The survey found that biotechnology and drugs was by far the top industry D&O underwriters are either concerned about or avoid. It was cited by 80% of the respondents, followed by medical device firms and banks, at 35% each. The most attractive industries were retail, cited by 65%, and energy and utilities, which was cited by 60%.