The Expert Podcast

Marsh LLC is one of the largest insurance brokers and commercial insurance providers in the country. What they're saying is that cyber insurance rates may start to ease up a little bit. Look, we've been talking about this for a couple of years—how cyber liability insurance premium rates and coverage has been a very difficult market. The premiums have been up, coverage has been off, and sometimes it's even impossible to get a policy. The reason why is because there was a lot of uncertainty in the marketplace for insurers.

Well, now that there's a couple of major changes, the rates are starting to become a little more feasible. What's the biggest factor? This is something we've talked about for over a year—that the insurers are recognizing they could become a victim. Insured meaning you, the business owner, are starting to realize: "Look, I'm at risk." If you start taking precautions for your risk, it'll help the insurer provide you with a reasonable quote, as the insurance companies like Marsh and others are seeing that business owners are recognizing that cyber attack is a real risk.

The number and frequency and severity of the claims is starting to go down because it's not just the insurance that's on board with this. It's kind of like if you bought fire insurance but didn't do anything to protect your building from fire. You just left gasoline around and, you know, have open flame near the propane tank and you didn't care anything about protecting your business. You do that because you know what the risk is for fire.

Same thing if you have slip and fall—you mop the floor, you make sure people don't trip on things. For a long time, business owners didn't realize what the risk was for cyber attack, cyber liability. It wasn't your fault. You were not exposed to this as a business owner. It's a new thing. This has only been around for a couple of years. Now that business owners are starting to see this, they're taking their own precautions, and the insurers are now adjusting their pricing to reflect the frequency and severity.

Right now, there is a sense of cautious optimism that attritional losses are better controlled by the companies and the insurers themselves. So if you are a proactive tech company and you have procedures in place, best practices in place to keep you from being a victim, it's very likely that you can obtain a really solid cyber liability insurance policy to protect the data and operational integrity of your business—even in the face of all kinds of hackers out there trying to bang away at your servers to delete or freeze up your data.