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Cyber coverage grabs attention but remains small part of market


Given ongoing high-profile cyber breaches on several fronts, cyber coverage is the hottest coverage in today's excess and surplus lines market.

“Cyber is probably the hottest space for creativity,” said Timothy W. Turner, Chicago-based president and CEO of R-T Specialty L.L.C., a division of Ryan Specialty Group L.L.C. “The breadth of coverage is being modified and created every day because the losses are so challenging.”

Cyber risks historically have focused on the risks of data breaches, financial fraud and identity theft, said Patrick Donnelly, president and deputy CEO of JLT Specialty Insurance Services Inc. in Chicago.

But “as we look at emerging risks” in the cyber area such as industrial espionage and critical infrastructure risk, “you'll continue to see the strengths of the E&S market in terms of addressing those emerging risks,” he said.

Cyber is “obviously the hot product today. That's one of the things that everybody is looking at, and I think demand continues to increase,” said James Drinkwater, property/casualty brokerage division president of AmWINS Group Inc. in New York, which launched an excess facility in July that provides additional large capacity up to $100 million with attachment points as low as $5 million.

“Cyber is still a very small part of the overall E&S market, but I think it's growing,” said Randall W. Goss, chairman and CEO of Dallas-based wholesaler U.S. Risk Insurance Group Inc.

“A few years ago, there was interest, there was exploration. Now, we're seeing much, much more purchasing” with customers “much more attuned to this as a risk, and that sensitivity goes all the way up to the C-suite, the board level. So we see that as an area that's been growing quickly, and it continues to grow quickly,” said Bryan Salvatore, New York-based-president of specialty products for Zurich North America Commercial.

While cyber is being written in the admitted and nonadmitted markets, nonadmitted coverage will be more extensive and customized, said Alan J. Kaufman, Farmington, Michigan-based president and CEO of H.W. Kaufman Financial Group and Burns & Wilcox Ltd. “The admitted market is more cookie-cutter, square-hole-in-square-peg” coverage, he said.

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