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Cyber insurance is having its “seatbelt moment”
Coverage is “maturing” to meet the realities of escalating technology-based security threats
DJ Carlisle
Tokio Marine HCC-Cyber & Professional Lines Group
Industry experts
Max Perkins
AXIS Insurance
Shiraz Saeed
Arch insurance
Trevor Baldwin
Baldwin Risk Partners
DJ Carlisle leads the Northeast cyber and technology underwriting team based out of New York City for Tokio Marine HCC-Cyber & Professional Lines Group (CPLG). He joined the company in 2018 as a senior underwriter. In this role he’s responsible for overseeing the region’s underwriting team, leading sales initiatives, and underwriting complex risks. Prior to joining Tokio Marine HCC-CPLG, he brokered large cyber and technology placements at Marsh and Willis Towers Watson as a member of their national cyber teams. DJ is originally from the Los Angeles area and graduated from the University of Southern California.
Tokio Marine HCC-Cyber & Professional Lines Group
DJ Carlisle
Max Perkins is head of strategy and innovation for global cyber and technology at AXIS Insurance. Max is responsible for supporting AXIS in maintaining a position of leadership across cyber underwriting and risk transfer, identifying innovation opportunities around future product development, and the delivery of cyber insurance training services. Before joining AXIS he was senior vice president at Lockton Companies, where he focused on risk management and placement strategy in cyber, technology errors and omissions, media, and miscellaneous professional liability on behalf of clients. He has 16 years of insurance experience, having also held roles at AIG, Beazley, and Chubb.
AXIS Insurance
Max Perkins
Shiraz Saeed is responsible for strategic direction for the underwriting, distribution, and marketing of the cyber risk products and services offered by Arch. Shiraz joined Arch in 2021 and has over 10 years in the cyber risk industry. Prior to joining Arch, Shiraz obtained a BA in finance from Hofstra University and an MBA in strategic management from Pace University. He started his tenure in the insurance industry in the professional liability division of American International Group (AIG) and quickly progressed to become part of the cyber risk product team responsible for the east coast territory. Most recently, Shiraz was the practice leader for cyber risk at Starr Global Insurance, where he oversaw strategic direction for their cyber risk products and services. With his extensive experience, Shiraz is able to help stakeholders both internal and external better understand the complexity of cyber risk, while also working with them to create solutions to help manage it.
Arch insurance
Shiraz Saeed
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Baldwin Risk Partners
Trevor Baldwin
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“We want to start with a strong culture of network security companies that take cyber risk seriously. It comes from the board down, so they educate their employees about risks, and they train employees”
DJ Carlisle,
Tokio Marine HCC-Cyber & Professional Lines Group
IT WASN'T that long ago that cyberattacks were viewed by many as a distant threat best suited to the futuristic plots of sci-fi movies. Although many people were vaguely aware of their existence, little about them was understood.
This perception of cyber security threats has altered over time, with both technology advances and world events shifting the digital security dynamics.
As insurance professionals can testify, cyber risks are very real. Increasing numbers of large-scale ransom attacks, cyber security breaches, and even smaller-scale threats such as phishing have helped to push companies of all sizes, as well as their insurance providers, to take the threat seriously. For brokers, the inclusion of cyber insurance coverage as part of their comprehensive packages for insureds has increasingly become the norm.
For the panel of cyber insurance experts gathered for the latest edition of IBA’s Executive Roundtable Insights Series, clearly articulating the cyber-based threat, developing increasingly sophisticated models to predict risk, and adequately preparing companies to be equipped for cyber breaches, including ransomware attacks, have all become a central focus as they look toward post-pandemic cyber realities.
“More specialized, consultative brokers are going to have more new business opportunities than the average firm that’s doing business like they were 30 years ago”
Gerard Vecchio, MarshBerry
“There are almost 12 sharing agreements on a cyber policy if you include the technology errors and omissions. It’s going to rip through six or seven of them within one incident, depending on how your business is structured”
Max Perkins,
AXIS Insurance
Shiraz Saeed, vice president-cyber risk product leader with Arch Insurance, agreed with Carlisle and drew attention to “our interdependency and reliance on technology that is unmatchable to anything previously seen in history.”
During the pandemic, companies of all sizes and even educational institutions were forced to adapt to a remote environment – creating online vulnerabilities that are unprecedented.
“All of a sudden, we went from zero to 60, and now every company is doing it [online] and that means that everybody has remote access and there is a huge drain on the broadband and interconnectivity overall,” Saeed elaborated.
“I’ve been underwriting cyber and technology errors for over 10 years now and how people actually define what cyber, or cyber risk, is is still fundamentally debatable and is different among multiple different insurance policies”
Shiraz Saeed,
Arch insurance
To provide clarity over the insurance definition of cyber, Saeed stated that it “typically means [it has] two parts. It means the failure of the organization to protect their computer system, or the failure of the organization to protect private information.”
Max Perkins, head of cyber strategy and innovation, AXIS Insurance, argued that other misconceptions prevail beyond defining the term.
“One misconception that I heard as a broker was [the belief that] cyber insurance doesn’t really work for me,” Perkins highlighted.
“I know a lot of brokers in our community have done a good job of trying to dispel the myth that cyber insurance policies are really only designed for large corporations or companies that handle a significant amount of private data,” Carlisle added.
“A key step beyond that is to test all of these controls regularly and have a tested incident response plan and engage a third-party vendor for penetration tests,” he added.
Cyber outlook
All the panel guests agreed that the insurance fight against cybercrime is an ongoing one. World events are leaving organizations open to data breaches. The threat of state-level cyber vulnerabilities exists with the cyber implications associated with a prolonged pandemic and the recent Ukraine conflict.
“We are all in this together,” Perkins stated.
“It’s perpetual in nature. The vigilance has to be perpetual, and the communication should remain ongoing. Companies, businesses, and organizations need to understand that this [cyber threat] is not going away,” Saeed described.
“If you take a long-term view, we need to continue to mature,” Perkins concluded.
The World Economic Forum sheds some insight on the current cyber landscape
Changing cyber landscape
With most organizations relying on increasingly digital working models, cyber risks have correspondingly expanded.
In this environment, more and more companies are seeking insurance protection. To match the demand, insurance companies have had to find ways to provide coverage to match these new vulnerabilities.
As DJ Carlisle, underwriting manager, Northeast – cyber & tech E&O, Tokio Marine HCC-Cyber & Professional Lines Group, pointed out, the numbers tell the story when it comes to insurance activity surrounding cyber coverage.
“Our submissions are up well over 100 percent, application and control requirements have gotten longer, and the underwriting process has become much stricter,” Carlisle stated.
How to safeguard organizations
All the panel experts agreed that cyber security should be viewed as a “dynamic threat” and, as a result, there should be continuous attention paid to the cyber-safety issues surrounding the technology models of insureds.
“There are almost 12 sharing agreements on a cyber policy if you include the technology errors and omissions. It’s going to rip through six or seven of them within one incident, depending on how your business is structured,” Perkins pinpointed.
Taking steps to prevent cyberattacks is at the core of what cyber insurance professionals would like to see from their insureds.
Some stark figures that tell the cyber security story
CUA
percentage of malware sent through email
12%
$17.44
Billion
$10.83
1%
Billion
$10.09
6%
Newcastle Permanent
Heritage Bank
Billion
$8.81
5%
People's Choice
Billion
$8.04
94%
14%
“The entire chain, from risk manager to broker to underwriter, is under a lot more stress.”
Carlisle suggested that steps should be taken by those involved in the business of cyber insurance to help alleviate some of the current pressures.
“We have gone beyond just the traditional application underwriting questions. We’ve brought in third-party vendors and invested in additional artificial intelligence and data-scientist-type roles. We have also built out our internal threat intelligence and breach response departments,” Carlisle outlined.
Lingering cyber-myths
Part of the cyber battle can be linked to the myths that still surround the topic of cyber security.
Saeed attributed these misconceptions to the ambiguity in the actual definition of cyber.
“I’ve been underwriting cyber and technology errors for over 10 years now and how people actually define what cyber, or cyber risk, is is still fundamentally debatable and is different among multiple different insurance policies,” Saeed stated.
“I think that the first thing that people should realize is that it is a defined term within your insurance policy, and you should take the time to look at it.”
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“We want to start with a strong culture of network security companies that take cyber risk seriously. It comes from the board down, so they educate their employees about risks, and they train employees,” Carlisle said.
Beyond these core values, insurance providers also recommend levels of protection be in place to reduce the risk of a company’s database being hacked.
“It’s all about hardening their security posture. It’s about investments: [implementing] access controls, endpoint protection, and should those things fail, [ensuring] backups are tested,” Carlisle elaborated.
Arch Insurance North America is part of a global insurer offering superior coverage and service. We participate in specialty lines where the talent and knowledge of our employees are a competitive differentiator. We serve North America from offices in the United States and Canada, providing superb coverage and claims handling through careful and diligent underwriting of risks and business-friendly solutions. With 20 years of operating history and strong financial ratings, our track record remains solid.
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AXIS Capital is a provider of specialty insurance and global reinsurance. Complex risks, underwriting expertise, and superior claims handling – these are attributes that define our company. At AXIS, we write business from a position of leadership and relevance in our chosen markets. Our underwriters are known for their business acumen and technical expertise. Our claims team champions clients’ needs with an honest approach and quick decision-making. To learn more about AXIS and our services, visit www.axiscapital.com.
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Tokio Marine HCC-CPLG is the US marketing name used to describe the cyber and professional lines-related insurance operations of Tokio Marine HCC. Tokio Marine HCC is a member of the Tokio Marine Group, a premier global company founded in 1879 with a market capitalization of $38 billion as of December 30, 2021. Headquartered in Houston, Texas, Tokio Marine HCC is a leading specialty insurance group. Tokio Marine HCC’s major domestic insurance companies have financial strength ratings of A+ (Strong) from S&P Global Ratings, A++ (Superior) from A.M. Best, and AA- (Very Strong) from Fitch Ratings.
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“At a macro level, the fundamental forces that have driven consolidation across the insurance distribution landscape remain as prevalent today as ever”
Trevor Baldwin,
Baldwin Risk Partners
“More specialized, consultative brokers are going to have more new business opportunities than the average firm that’s doing business like they were 30 years ago”
Gerard Vecchio,
MarshBerry
“Sellers no longer view a robust technology offering as a nice-tohave item; if a buyer isn’t bringing technology enhancements as a value proposition to the table, they are going to lose out on more transactions than they win”
Timothy J. Hall,
Relation Insurance
“Traditionally, financial services have not been the first investment area for most private equity funds, but today, insurance is an attractive industry because it has been stress-tested”
Phil Trem,
MarshBerry
In Partnership with
Read on
Trevor Baldwin
Baldwin Risk Partners
Industry experts
2015
2016
2017
2018
2019
12%
10%
8%
6%
4%
2%
0%
All ADIs
Major Banks
Mutual Banks
8%
7.3%
7.5%
3.6%
4.9%
11.3%
5.3%
3.8%
3.6%
3.0%
6.7%
3.8%
1.7%
7.0
Loan Portfolio Growth (2015-2019)
TOP 10 MUTUAL BANKS BY TOTAL ASSETS, 2019
CUA
Billion
$17.44
12%
Newcastle Permanent
Billion
$10.83
1%
Heritage Bank
Billion
$10.09
6%
People's Choice
Billion
$8.81
5%
Teachers Mutual
Billion
$8.04
14%
BRP is an award-winning entrepreneur led and inspired insurance distribution holding company delivering solutions that give our clients the peace of mind to pursue their purpose, passion and dreams. Our family of firms’ best-in-class resources and diverse portfolio of services are innovating the industry by taking a holistic and tailored approach to insurance, risk management and employee benefits.
Find out more
Founded in 1981, MarshBerry has grown to become the nation’s #1 M&A Advisory Firm and top growth consultant to insurance agents & brokers, specialty distributors, private equity firms, banks & credit unions and insurance carriers, through industry-specific services that include: Merger & Acquisition Advisory, Debt & Equity Capital Raising, Organic Growth Consulting, Market Intelligence and Connect–Peer Exchange Network.
Find out more
Relation Insurance Services, formerly Ascension Insurance, is a specialty insurance brokerage that offers superior risk-management and benefits-consulting services through our family of brands across the United States. More importantly, we’re a team of experienced professionals who genuinely care. Whether it’s for you, your family, or your business/organization, we want to be the relationship you trust for answers to your questions, solutions for your insurance needs, and peace of mind for your future.
Find out more
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Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Baldwin Risk Partner
Trevor Baldwin
“At a macro level, the fundamental forces that have driven consolidation across the insurance distribution landscape remain as prevalent today as ever”
Trevor Baldwin,
Baldwin Risk Partners
“More specialized, consultative brokers are going to have more new business opportunities than the average firm that’s doing business like they were 30 years ago”
Gerard Vecchio,
MarshBerry
“Sellers no longer view a robust technology offering as a nice-tohave item; if a buyer isn’t bringing technology enhancements as a value proposition to the table, they are going to lose out on more transactions than they win”
Timothy J. Hall,
Relation Insurance
“Traditionally, financial services have not been the first investment area for most private equity funds, but today, insurance is an attractive industry because it has been stress-tested”
Phil Trem,
MarshBerry
In Partnership with
Read on
Trevor Baldwin
Baldwin Risk Partners
Industry experts
are selling do so for a variety of reasons, including a desire to crystallize their investment – and likely single largest asset – at current market valuations, a lack of internal perpetuation and a recognized need for additional scale and resources.
2015
2016
2017
2018
2019
12%
10%
8%
6%
4%
2%
0%
All ADIs
Major Banks
Mutual Banks
8%
7.3%
7.5%
3.6%
4.9%
11.3%
5.3%
3.8%
3.6%
3.0%
6.7%
3.8%
1.7%
7.0
Loan Portfolio Growth (2015-2019)
TOP 10 MUTUAL BANKS BY TOTAL ASSETS, 2019
CUA
Billion
$17.44
12%
Newcastle Permanent
Billion
$10.83
1%
Heritage Bank
Billion
$10.09
6%
People's Choice
Billion
$8.81
5%
Teachers Mutual
Billion
$8.04
14%
BRP is an award-winning entrepreneur led and inspired insurance distribution holding company delivering solutions that give our clients the peace of mind to pursue their purpose, passion and dreams. Our family of firms’ best-in-class resources and diverse portfolio of services are innovating the industry by taking a holistic and tailored approach to insurance, risk management and employee benefits.
Find out more
Founded in 1981, MarshBerry has grown to become the nation’s #1 M&A Advisory Firm and top growth consultant to insurance agents & brokers, specialty distributors, private equity firms, banks & credit unions and insurance carriers, through industry-specific services that include: Merger & Acquisition Advisory, Debt & Equity Capital Raising, Organic Growth Consulting, Market Intelligence and Connect–Peer Exchange Network.
Find out more
Relation Insurance Services, formerly Ascension Insurance, is a specialty insurance brokerage that offers superior risk-management and benefits-consulting services through our family of brands across the United States. More importantly, we’re a team of experienced professionals who genuinely care. Whether it’s for you, your family, or your business/organization, we want to be the relationship you trust for answers to your questions, solutions for your insurance needs, and peace of mind for your future.
Find out more
executive insights
Top
Insight Leaders
Overview
General Stats
Insights
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Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Baldwin Risk Partners
Trevor Baldwin
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Share
Source: FinCEN Report 2021
value of ransomware transactions every month in 2021
percentage of malware domains that are new and used for only a week
$102.3
million
20%
55%
39%
6%
How many organizations have been affected by a third-party cyber incident in the past two years?
have not been affected
have been affected
do not know
What do they expect will have the greatest influence on transforming cybersecurity in the next two years?
48%
28%
say automation and machine learning
say remote/hybrid work environment
Source: World Economic Forum Insight Report January 2022
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About us
Contact us
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