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Cyber buyers weigh costs and benefits

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Policyholders are generally getting the cyber insurance limits they want as they conduct analyses to decide whether more expensive, higher limits are worth their additional cost.

Experts say that, in general, there is about $600 million in capacity available for individual cyber risks. “I haven’t seen anyone walk away saying, ‘If only I could buy another $100 million,’” said Bob Parisi, New York-based cyber product leader for Marsh L.L.C.

“I think clients are able to buy as much as they want or are willing to spend, given their budget, with few exceptions,” he said.

“The highest cyber tower that I have credible information on is $700 million,” said Michael Born, Kansas City, Missouri-based vice president of the global technology and privacy practice at Lockton Cos. L.L.C., although he added he has heard rumors of even larger limits.

Cost can be a barrier, however, Mr. Born said. “There are more carriers out there willing to write more limits,” but their cost is prohibitive, he said.

“You see the buying community deciding whether the trade-off makes sense, given the attachment to which the potential loss might hit, and you have to weigh that against your balance sheet,” said Adam Cottini, managing director of insurance and risk management in North America at Arthur J. Gallagher & Co. in New York.

No one is coming into the market with a blank check saying, “Get me every available limit you can and I’ll buy,” Mr. Parisi said. They usually have an “X” amount of dollars they are willing to spend, he said.

The available capacity will grow, said Joe DePaul, New York-based cyber/errors and omissions practice leader for Willis Towers Watson P.L.C. “As the market continues to expand and new entrants come in, I think that will increase significantly, frankly, over the next year.”