The spike in demand for cyber security coverage outpaces demand increases for other emerging casualty risks by a wide margin, according to a recent survey of buyers, brokers and insurers, according to a recent survey.
Supplying six potential choices of emerging casualty risks—cyber security, e-cigarettes, drones, autonomous vehicles, product recall, and telematics—London-based specialty lines broker RKH Specialty asked which was seeing the biggest jump in demand from buyers as part of a survey conducted at the RIMS Annual Conference in late April.
A full 70 percent of the 135 respondents selected cyber, with product recall and drones come in a distant second. Eleven percent of the respondents selecting product recall and another 11 percent selected drones. The remaining exposures together garnered just 8 percent of the responses.
On the property side, supply chain disruption was identified by 61 percent as the top risk, with flood next (30 percent) and tornadoes (9 percent) following.
“Losses stemming from cyber-related attacks and business interruption can be catastrophic for individual businesses,” said Barnaby Rugge-Price, RKH Specialty’s CEO, in a statement about the survey.
“Health care and retail have been the major buyers in the cyber space to date but we are seeing an increasing conversion rate across the whole of our portfolio. After a number of years of looking at the offering, clients are increasingly deciding to purchase the cover as the product has improved and the frequency of attacks has continued to increase.
Rugge-Price added: “There has also been a heightened focus on the business interruption aspect, where cyber attacks can cause whole facilities to shut down. But whether cyber related or not, any interruption to the supply chain can cause a disproportionate loss. The survey highlights the importance of specialist insurance for a whole host of emerging risks.”
The survey found a large majority of respondents—some 80 percent—are witnessing an increasing need for specialist risk coverages to provide better, targeted solutions for a wide range of property and casualty exposures. Of that 80 percent, about 39 percent said there is a large, increasing need, while the others indicated a small increase in need for specialist risk coverages.
Who is meeting the demand?
Nearly half of respondents (47 percent) indicated that they rely on domestic U.S. brokers and carriers to meet the growing demand for specialist risks, with London a close second at 36 percent. Emerging markets ranked third at 11 percent, Bermuda fourth (4 percent) and Continental Europe last (2 percent).
“It’s no surprise to us to see a growing demand for highly-specialized risk coverage. U.S. clients tend to seek the best value from their insurance spend by tailoring coverage around their firms’ specific exposures and needs,” Rugge-Price said. “Our aim is to respond to the increasing requirement with specialty product advice and placement services around the globe. We will continue to work with our markets to ensure we are responding to each request, providing real value in both coverage and capacity.”
RKH Specialty conducted the survey following its recent merger with Hyperion Insurance Group.
About RKH Specialty
RKH Specialty accesses the world’s leading international insurance markets to create unique risk solutions and program facilities across a wide range of industries and risk classes. RKH Specialty is part of the Hyperion Insurance Group.
About Hyperion Insurance Group
Founded in 1994, Hyperion is an independent, employee-owned international insurance and reinsurance intermediary group. Hyperion is comprised of The DUAL Group and Howden Broking Group. Hyperion’s businesses operate across Europe, Asia, the Middle East, Latin America, Australia and New Zealand and in the USA, and employ over 3,000 people in over 120 offices in 37 countries.
Source: RKH Specialty