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Insurance experts monitor evolving cyber, environmental risks

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NEW YORK — Evolving ransomware risks remain a significant concern for the cyber insurance market, while environmental insurers are carefully monitoring developing mold claims.

A panel of insurance industry experts offered their views on the current state of the property, cyber and environmental markets on Thursday during the 21st annual Policyholder Advisor Conference held by policyholder law firm Anderson Kill P.C. in New York.

On the cyber front, Kelly Geary, managing principal, U.S. cyber practice leader and coverage and claims leader for Integro Insurance Brokers in New York, said the WannaCry and Petya viruses that struck earlier this year “gave the insurance industry a glimpse of what it would be like to have a catastrophic event.”

“Luckily for the domestic market it didn’t really impact them to any great degree, but they’re certainly thinking about it differently than they were before. Ransomware is a $1 billion-a-year industry, so the return on investment for a hacker is incredibly high,” Ms. Geary said.

Ransomware is not going to go away, Ms. Geary added.

“It’s evolving,” she said. “Cyber criminals always seem to be one step ahead of us.” 

A number of insurers are offering stand-alone cyber coverage, so supply is outpacing demand, Ms. Geary said. 

“With high-risk industries like health care, financial institutions, hospitality, pricing is a little higher there, but still relatively low given the supply that’s out there, and this allows for more negotiable terms.”

Cristin Bullen, senior vice president and Northeast environmental leader for Marsh L.L.C. in New York, discussed cases involving mold, where properties such as hotels and hospitals have been filing significant claims.

“There are a lot of hotels doing renovations and finding that mold is all over the hotel,” she said. “The market is beginning to react. Many of the environmental insurers are starting to apply per-room deductibles, if not declining that class of business altogether.”

Hospitals are dealing with mold claims involving bodily injury, where people with compromised immune systems are becoming ill, Ms. Bullen said.

“That is something that insurers are carefully watching,” she said.

Turning toward natural disasters, Mike Reich, property/casualty broker with Peachtree Special Risk Brokers L.L.C. in Atlanta, noted that 2017 has been an active year, given the number of hurricanes, fires and other events.

“I’ve only been in business for seven years,” he said. “And since I’ve been in business, rates have been declining dramatically. The activity that we’ve finally had has put uncertainty into the market.”