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The Marsh Cyber CAT product has gone through several iterations, but a desire to ensure a simple and consistent approach to covering major cyber exposures has always been at the heart of the offering.
“We needed to approach cyber in a way that’s not dissimilar from the way that property approaches a risk: That all-risk property policy and all the perils are there unless they’re expressly excluded or the carrier decides to pull some of it out so we started with the premise that all of a company’s technology perils are insurable,” said Robert Parisi, New York-based cyber product leader for Marsh LLC. “It’s meant for large sophisticated insureds that are willing to pay a sizable retention … looking to buy large limits: $15 million to $1 billion.”
In developing Cyber CAT 3.0, Aarti Soni, Marsh senior vice president based in New York, focused on ensuring the form responded to potential cyber losses under every scenario.
“Carriers are very trigger focused — what type of triggers create a loss — and I think our clients are very focused on loss and damage,” she said. “They’re concerned that any loss emanating from a cyber-type risk should be covered.”
She also examined potential overlaps and gaps between cyber and other policies such as property, kidnap and ransom and crime and ensuring losses not sufficiently addressed to date such as social engineering and electronic funds transfer are “brought into the cyber fold.”
The difficulty in crafting a product that stays current with such an evolving risk was highlighted by an Illinois Supreme Court decision in January allowing plaintiffs to sue firms for violating the state’s Biometric Information Privacy Act for allegedly failing to properly notify people about their policies even if no actual harm is claimed.
“It is a challenge for our entire industry because technology is going to continue to evolve, and as businesses are using more and more tech (such as biometrics) … that’s something our industry has to think about and make sure our policies are addressing one way or another,” Ms. Soni said.
Another major challenge has been the “tale of two markets,” as Mr. Parisi calls it. “North American carriers are more comfortable with their own form as opposed to a form from a broker, whereas the London market has more socialized to the form being driven by the broker,” he said.
Cyber CAT 4.0 was expected to be ready by the Risk & Insurance Management Society Inc.’s annual conference in Boston, according to Mr. Parisi.
• Aon PLC — The Innovation & Solutions team offers parametric products for clients to access index-triggered solutions that protect them against losses from severe weather.
• Aon PLC — The group collaborated to develop a market-proactive approach for the 2018 hurricane season to help better understand market trends and post-loss strategies.
• Marsh LLC — Marsh’s Aircraft Finance Insurance Consortium was designed to serve the aircraft finance market based on the principles of commercial insurance and protecting aircraft investors from defaults.
• NFP Corp. — The broker established a venture fund and innovation lab designed to make smart and efficient investments in technology start-ups that offer promise to address evolving customer insurance needs.
Business Insurance presented the second annual U.S. Insurance Awards on March 21 in New York, and more than 450 people gathered to celebrate the achievements of outstanding insurance and risk management professionals.