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Globalized businesses often have a complicated production process that includes outposts and factories in various countries, and the insurance industry may not doing an effective enough job at creating a more streamlined insurance product to address these complexities.

This was the message from The Hartford head of middle market international Alfred Bergbauer, who spoke to Insurance Business at RIMS.

Add in rampant political unrest and instability, corporations and insurers alike are having to find new ways to safeguard their assets and output to avoid costly or complicated claims.

“I can’t underscore the necessity of planning an insurance package to meet the complex needs of a client,” Bergbauer said. “Our industry is woefully inadequate at doing this, and the time to change is now, especially as operating on a global scale has become more complicated.”

Rethinking an ineffective and fragmented insurance chain

What is typically implemented when a company is seeking insurance for a global supply chain is a fragmented approach to securing policies from different carriers.

“A business would buy insurance in the various separate countries it has offices or operations in,” Bergbauer said.

However, when there is a complex loss that impacts the entirety of the production chain, it can put accountability into limbo as the insurers deflect their responsibilities in paying out a claim.

“Theoretically, now you will have multiple carriers now saying, ‘it’s not my loss, it’s theirs’, which can impede on solving a business disruption quickly and rectifying the situation,” Bergbauer said.

To effectively address global client needs, Bergbauer said that insurance stakeholders need to:

1. Understand the ins and outs of this chain through the specialty market.
2. Be able to construct a product or package that responds to these complexities.

“No matter what you make, it is in a complex chain,” Bergbauer said.

When a broker takes the time to really address the intricacies of global production and the risks that are involved in that, they can provide a detailed summation to an insurer.

“Upon receiving this information, a carrier would appreciate the in-depth research that has been conducted,” Bergbauer said. “They can then put a structure together, that’s really going to meet the risk financing needs of a customer.”

Economics and global politics becoming “inextricably intertwined”

At RIMS, Insurance Business also sat down with Adrien Robinson, executive vice president of global specialty at Navigators, a subsidiary of The Hartford. Robinson shared how the intertwined nature of geopolitics and economics is influencing how businesses and insurers can work more effectively.
While companies have established operations in countries across the globe, there has been an inherent melding of geopolitical strife and economics that has become more inescapable, according to Robinson.

“The two are inextricably intertwined,” Robinson said. “But that wasn’t always the case.”

One of the main reasons behind this coalescence was the COVID-19 pandemic, where more democratic countries were more mindful of doing business with nations that have a proven track record of not being so friendly to others, according to Robinson.

This has only been exacerbated by the war in Ukraine.

“This mixing of geopolitical issues with politics is happening at a rapid speed,” Robinson said.

“What was expected to happen over decades occurred in a span of three years.”

From an insurance standpoint, the number one goal is ensuring that workers who may be deployed in these highly contested areas are safe and have proper protocols to respond to any claims related to worker safety. 

Secondly, while insurers can provide products and packages that will allow a business’s globalization plans to move forward, carriers can also tap into their wealth of expert knowledge to guide them on their path on expansion to make sure it is done properly.

“While insurers have coverage and are willing to follow this corporations around the world, we also must be effective at analysing and preparing for emerging risks due to the volatile political climate worldwide,” Robinson said.

This includes finding solutions for events that are deemed uninsurable, especially confiscation, which was prevalent in Russia after sanctions were placed on the nation when it first entered the Ukraine.

“Leaders in boardrooms across the globe are aware of this and trying their best to mitigate any further disruptions or potential losses,” Robinson said.

Reporting on its financial and operational performance for the financial year 2022/2023, Flood Re issued forth a call for government, insurers and consumers to take urgent adaptive action to combat accelerating flood risk.

The joint initiative between the UK insurance industry and the UK government revealed that it backed 265,826 million policies during the year, up 3.6% from last year. It has been a busy period for the organisation, which will see Mark Hoban come to the end of his tenure as chair in September after eight and a half years of service, during which he successfully oversaw the creation, authorisation, and establishment of Flood Re.

In a media briefing discussing the annual report, CEO Andy Bord (pictured) paid tribute to Hogan and said he personally has “benefited hugely” from Hogan’s guidance and counsel since he joined Flood Re in 2017. He added that he is looking forward to working with the organisation’s new chair, who will be announced in due course.

Meanwhile, Bord noted that Flood Re’s Build Back Better (BBB) scheme has gained significant traction, with 63% of the market committing to offering the scheme as an option for the highest flood risk householders. And he affirmed his confidence that the insurers who have not yet signed up for the initiative will do so, noting that uptake continues to grow and is already in excess of two-thirds of the market.

“Inevitably, we focused on the big players first,” he said, “because that’s how you get the maximum traction and that’s where we’ve had success. It’s [now] about converting that long-tail of smaller insurers and so far, we have seen different levels of readiness rather than different levels of support. Personally, I want to achieve both. I want everyone to be signed up but equally, I want to know that there’s the confidence that’s offered with a robust product.”   

Among the key financials reported, Flood Re revealed that its before-tax profit of £110 million (down from 2022’s £132 million), reflects a “broadly benign year for flood events” and a planned reduction in income raised from the Levy on insurers of 25% to £135 million (down from £180 million in 2022). Flood Re’s GWP received increased from £46 million in 2022 to £52 million while the scheme increased its investment income to £14 million for the financial year, up from £0.3 million last year. 

Bord highlighted that Flood Re continues to deliver on its stated public purpose of increasing the availability and affordability of flood insurance. This is ably reflected in the metric that 99% of people living with flood risk are now able to obtain 15 or more competitive quotes, compared to before Flood Re launched when only 9% of this risk profile could obtain two or more quotes. Looking to the future, however, he said it’s clear that the need for Flood Re is ongoing.

While the government’s committed spending programme of £5.2 billion over five years is double the previous government’s investment, he said, what that spend is effectively doing is keeping flood risk flat. This risk needs to be actually reduced, in order to create confidence in the market’s ability to continue to offer affordable flood insurance when Flood Re exits in 2039. To achieve that, change needs to be driven at a household level as well, which is where the BBB scheme fits in.

Touching on how BBB is resonating with brokers, Bord noted that the engagement of the broker market with the initiative has been very positive, both in terms of their interest and their commitment to working to communicate its benefits to their customers. At BIBA’s 2023 conference, he said he saw first-hand the willingness of brokers to meet and engage on this topic.

“I think the thing about brokers is that they’re often accessing a niche, with often a significant overlap with flood, which is why it’s relevant to us,” he said. “So having the confidence that the insurer that your property is going to be placed with will actually build you back into a more resilient state, if you’re unlucky enough to be flooded, is a really important consideration when you’re buying your insurance through your broker.”

Last week’s launch of Flood Re’s transition plan was exceptionally well-timed given the alarming extreme weather events dominating headlines in recent weeks. These events underscore the importance of “not just urgent but decisive” adaptation measures, he said, and Flood Re has identified four major commitments which highlight the its ambition to lead from the front on this transition plan.

The first is its recommitment to the BBB scheme, he said, which has already been very successful but needs to be fully embedded across industry. His ambition is that the industry will challenge itself to normalise the scheme within the next year or so – becoming a standard part of a household policy. Flood Re’s second commitment is to develop a comprehensive scoring methodology for property-level flood resilience adaptations.

“The PFR (Property Flood Resilience) industry has actually seen quite a lot of innovation since Flood Re went live, but the growth has been pretty linear,” he said. “And we know to cope with the demand, we need to see exponential growth. And I believe Build Back Better will help that and our scoring methodology will take it a step further and should unlock further private and public funding streams.”

The third area of focus is the use of flood performance certifications, he said. This will see Flood Re bring to the market a scheme whereby people buying, selling or renting a home – at an individual property level – will be able to do so with greater confidence and understanding of the measures that have or could be installed within the home. Finally, and perhaps most significantly, Flood Re is looking to establish a centre of excellence to improve UK’s knowledge infrastructure around flooding and how to manage this risk.

“In summary,” he said, “we’ve seen another strong year of delivery, both on our core purpose, underpinned by robust financial results, and we’ve got real clarity on what needs to happen both across the market – [with our] call to action – and the commitments that we’re making ourselves at Flood Re in preparation for 3039 when we will exit the market.”

How can insurance brokers break the mentality that cheapest is best when it comes to covering clients in a highly competitive trading environment? This was the question recently put to a panel of experts during an IB TV interview with AXA‘s Jon Walker and Financial & Legal’s Karen Beales among those lending their insights.

“Cheapest, as we know, isn’t always the best,” Beales said. “Sometimes it can be, we mustn’t assume that by buying more expensive, it will be better. However, the insurance industry generally has focused so very much on the sales process, I think it’s crucial that we also think about ensuring that customers understand the products that they’re buying, and Consumer Duty may well help that.

“By going on various aggregator sites, or perhaps contacting an insurer directly, the customer doesn’t always understand the insurance product. It’s absolutely crucial that they can understand what they’re buying and understand how one product compares with another. Then they can understand the value of that. The key thing for me is to make sure that the customers are really clear about the product that they’re buying and what it offers to them individually.”

For Walker, the crux of this question is also about understanding, and he emphasised the role that insurance brokers have to play in creating a greater understanding of a customer’s needs and what’s important to them. He also acknowledged that given the current economic conditions, the price of a policy is justifiably very important to consumers.

Where he believes more focus needs to be directed is towards helping an insured understand what happens at the point of a claim, and why it’s so important that they’re insuring their business appropriately. This prevents an insured from being left in a situation where, in the event of a claim, they’re wondering why the amount being paid isn’t covering the loss they have suffered.

“Underinsurance is a topic across the industry, it’s something I think we all have a responsibility to help customers with,” he said. “I think it’s also a really good way of talking about why price and price alone isn’t necessarily in the customer’s best interest but is part of a wider process and package of coverage that they need to have in place for their business – to get it back up and running in the quickest time possible and to the level which [they] are expecting.”

The ARAG Group and ERGO Versicherung AG – ERGO Group’s property & casualty insurer in Germany – today revealed that they have signed an agreement regarding the acquisition of D.A.S. UK, ERGO’s legal protection insurance business in the UK. The financial terms of the agreement have not been disclosed.

D.A.S. UK launched over four decades ago and currently runs a legal expenses insurance company (D.A.S. Legal Expenses Insurance Company Limited) as well as a law firm servicing legal expense claims (D.A.S. Law Limited). Both businesses are both supported by an administrative services company ( D.A.S. Services Limited). The total GWP of D.A.S. Legal Expenses Insurance Company Limited was £129 million in 2022.

Commenting on the deal, Dr. Renko Dirksen, speaker of the board of management of ARAG SE and non-executive director at ARAG plc said: “The international business of the ARAG Group is a substantial part of our strategic positioning.

“This said, the planned acquisition of D.A.S. UK is a unique opportunity acquiring a complementary UK business and offering new perspectives for our customers and employees alike. Combining the profound knowledge and extraordinary skills of both entities will result in top-notch products and services for the benefit of all customers.”

ARAG noted that the agreement reached is subject to regulatory approval and until this is received, ARAG plc and D.A.S. UK will continue to operate independently without any changes to business and operations.

ARAG Plc CEO Tony Buss also commented on the deal and said: “We are excited about the opportunities this intended acquisition offers since we are pursuing a long-term strategy, strongly investing in the UK legal expenses insurance segment. We intend to offer a ‘best of breed’ portfolio to deliver even broader and better products as well as services to a wider customer base – always putting our customers and business partners first.”

The ARAG Group previously acquired the operations and business of D.A.S. UK’s branch in the Republic of Ireland in 2019, as well as the entirety of ERGO Group’s D.A.S. business in Canada in 2021.

It’s been quite the period of celebration for Insurance Business, as the industry’s global publication scooped a host of award successes.

There is no publication without a fantastic editorial team – and at IB we believe we have the best in the business, something that has been emphasised by the recent honours. Leading the charge was North America editor Jen Frost, who was crowned General Insurance Journalist of the Year at the Headlinemoney Awards, and also won big at the APEX Grand Awards for Publication Excellence for her outstanding piece on the Florida and Louisiana insurance crisis, which you can read by following the link.

Meanwhile, Mia Wallace, senior editor, has also scooped a host of accolades. She won not only the Best Profile/Interview of the Year at the BIBA Media Awards 2023, but also secured the WTW Media Awards 2023 Insurance & Risk Profile of the Year. You can read one of her award winning profile pieces here.

The BIBA Media Awards 2023, also saw recognition for both Jen Frost and Gia Snape, the latter named among the industry’s rising star nominees. Meanwhile, Insurance Business was applauded again at the APEX Grand Awards for Publication Excellence, in the Websites category.

“In Jen, Mia and Gia we have three absolutely outstanding journalists, who have really raised the standard for insurance journalism across the board,” said global editor Paul Lucas. “However, it would be remiss of me not to shout out to the wider team too – all of whom make fantastic contributions and I am sure, in many cases, will be in the running for awards in their own right in the near future.

“Huge thanks should also go to our sponsors, for taking the time to support trade journalism, and to our readers who continue to offer such great support with their reads, listens, views, feedback and participation in our industry surveys. We genuinely appreciate everyone who has given us such wonderful backing.”

Here at Insurance Business UK we recently celebrated one of the high points in our editorial calendar  – the publication of the annual Rising Stars report. Rising Stars 2023 showcased 52 exceptional young insurance professionals, each acclaimed for the part they are playing in shaping the future of the market.

This year’s awards were determined by an illustrious panel of independent industry leaders – comprised of Ajay Mistry of iCAN, Michael Keating of the Managing General Agents’ Association (MGAA), Steve White of the British Insurance Brokers Association (BIBA), Kishan Mangat of iCAN, Amy Green of The Insurance Institute of Sussex and Maxine Goddard of Sompo International – and nominees had to be aged 35 or under as of June 30, 2023.

Upon first read, the standout for me was the unique blend of skills, experiences, backgrounds and perspectives that defined and delineated the future leaders celebrated.

What is expressly clear is that everyone in insurance has a story to tell. Take, for example, CFC’s Ellie Saunders who uses her platform in the industry to help disadvantaged young people achieve their career potential, or Satinwood Underwriting’s Tendai Msipa whose parents emigrated from Zimbabwe to the UK as political refugees in the late 2000s.

Among the skillsets revealed by the report was how these young professionals are using language to formulate strong links across the market and move beyond cultural boundaries. Alicia Rodriguez Fernandez from Liberty Specialty Markets is a case in point. Having grown up in Spain, she is proudly multilingual, while CFC’s Julia Soong-Leblanc is fluent in English, French, Italian, Spanish and Mandarin.

2023’s Rising Stars are a living, breathing advertisement for the idea that all roads can lead to an insurance career. They epitomise the idea that there’s no one background – academic, cultural, geographic or otherwise – that is ‘right’, a sensible conclusion for an industry that deals with clients from every conceivable walk of life.

Yet for all their myriad of differences, a re-read of the report starts to reveal the connective threads that unite these young insurance professionals. First and foremost, there’s a strong shared agreement of which traits are the most critical to rapid career advancement – with hard work, emotional intelligence and specific management training ranked above having a long career at the same employer or a relevant degree.

Sharing his thoughts on this, Msipa said he believes hard work taking the top slot is a “no-brainer”.

“When you join the insurance industry, you don’t quite realise the amount of work that happens in such short time spans – the typical renewal periods,” he said. “Hence, I see hard work as the quality that holds the utmost importance and one that I have exhibited throughout my working life.

Belief in the power of networking was another strong theme across the report, with several of the winners surveyed highlighting the impact it has made on their own career progression. It’s an open secret in the insurance industry, Msipa said, that you are its most valuable asset because of your network.

Resilience is another shared characteristic of the winners, an especially valuable trait given the significant change and uncertainty facing the market today. Remaining open to getting involved, pushing outside your comfort zone and maintaining flexibility in your approach were also identified by Deepti Vohra, partner at PwC as key ways in which younger insurance professionals can stand out as being among the best in the UK.

Certainly these traits hold true for Rodriguez Fernandez who noted that the secret to her success is her tendency to push herself to leave her comfort zone and not let fear or uncertainty hold her back.

“Equally,” she said, “persistence and resilience have also played an important part in my career as facing challenges or having to adapt quickly to different or new situations is something we all face at some point.”

But perhaps above all else, the awardees evidently share a passion for insurance. Amid ongoing conversations on the war for talent, and given the pressing talent gap that does persist in the market, it’s encouraging to see there is such a steady pipeline of future leaders, though, of course, more does need to be done to encourage further development in this space.

This passion and a demonstrable commitment to building a career within the insurance industry were essential criteria during the nomination process – and, as a result, the winners provide a clear snapshot of the future of the industry. And as I hope you will agree, it makes for a very encouraging picture.  

Canopius, a global specialty (re)insurer, has announced the appointment of Isabel Finn as a senior cyber threat intelligence analyst.

In her new role, Finn will collaborate closely with Mathin Ahmadi, head of cyber insights and analytics at Canopius, to launch the company’s in-house cyber threat consultancy service.

Finn previously worked as a threat intelligence consultant at FTI Consulting. Prior to that, she served as a cyber threat analyst at Darktrace and a consultant cyber analyst at government advisory firm Francis Maude Associates (FMA).

At Canopius, Finn will co-lead the introduction and development of the firm’s new cyber threat consultancy service. This practice aims to provide enhanced support to insured clients, offering expert guidance on strengthening their cybersecurity defences and delivering tailored risk mitigation programs, Canopius said. Building on the recent launch of Canopius’ Cyber Incident Management Team (CIMT), policyholders will now have access to specialised in-house support at every stage of a cyber incident.

Canopius has recently conducted one of the insurance market’s most extensive studies on the use of “outside-in” scanning tools to gain insights into cyber claims drivers. Finn will play a crucial role in advancing Canopius’ cyber pricing and risk selection process, leveraging the findings of this study and other research endeavours.

“The cyber threat is continuously evolving. Cyber criminals are becoming more sophisticated and their modes of attack more diverse,” Ahmadi said. “For our clients, understanding and mitigating the threat is as important as ensuring they have the appropriate cover in place if their systems are breached. We are committed to bringing on board the right mix of talent which will allow us to remain at the forefront of cyber threat intelligence and provide a leading service to clients, at every stage of their cybersecurity journey.

“I am very pleased to welcome Isabel to the cyber team, who represents another key hire as we continue to scale our services and capabilities. Isabel, like many of our recent hires, augments our underwriting expertise by bringing front line experience, from outside the insurance sector, to Canopius.”

“My work in cybersecurity has encompassed proactive and reactive approaches,” Finn said. “I have successfully operated in a security operations centre, engaged in threat hunting, conducted compliance and risk assessments, and led transformation programs. This range of experience provides me with a broad perspective of the threat landscape.

“My passion lies in building predictive and quantitative risk models that leverage cyber threat intelligence, macro business factors and technical security controls to assess an organisation’s risk level to cybersecurity threats. By combining these elements, and leaning on my breadth of cyber experience, I hope to deliver actionable insights to the cyber and technology team. I can’t wait to begin.”

Finn is the latest addition to the Canopius roster. The company also recently announced the appointment of Sam Harrison as group chief underwriting officer.

Have something to say about this story? Let us know in the comments below.

Though its war with Russia is far from over, Ukraine faces another battle: rebuilding its conflict-torn economy.

Nearly 500 global companies from a wide swath of industry pledged their support to the rebuilding effort at the Ukraine Recovery Conference in London last month. Under the Ukraine Business Pact, private sector firms committed some $5.2 trillion in investment.

Future investments and infrastructure will be almost impossible to deliver without insurance, and without the right data, it will be extremely challenging for insurers to underwrite the risks involved, according to one insurtech leader.

Mark Costin (pictured top), commercial director at the London-based Insurwave, explained that data will likely drive the insurance industry’s efforts to support private investments in Ukraine.

“Governments will have to lean on the private sector to provide the infrastructure because they simply don’t have the juice to do it themselves. At that point, they will probably initially indemnify the private sector,” Costin said.

“But as the process moves forward, I can see a situation where governments will push the risk from the treasury back towards the private sector, because they will not want to retain risk. The invitation will be to the private contractors to acquire insurance.

“So, I think the solution will be found in the insurance sector. At that point, insurers are going to need to know what the risk is and what the assets are that they’re insuring, where the assets are, what the value is, and what the aggregation is in certain locations. That can only be achieved if the data is collected digitally and housed in a way that is completely visible to the insurers and the financiers.”

Private sector and insurance key to Ukraine’s recovery

According to the World Bank, the cost of rebuilding Ukraine over the next decade is pegged at over $400 billion. The figure is expected to rise as the war drags on.

Ukraine’s partners have agreed to provide a further $60 billion to meet the country’s recovery and reconstruction needs, according to UK government. The US announced $1.3 billion in additional aid to Ukraine, including $675 million to modernize Ukraine’s critical infrastructure.

Risk pricing to cover those reconstruction projects would require tremendous amounts of data, according to Costin.

Insurwave, for its part, has some expertise in war-related risks. It said its platform for complex commercial lines insurance helped enable the Black Sea Grain Deal that facilitated the export of much-need grain exports from Ukrainian ports last year.

Ascot Underwriting, a Lloyd’s syndicate and global specialty insurance underwriter, provided coverage for grain and food products under the treaty. As Ascot’s technology partner, Insurwave said it helped increase the speed of covering the risk through real-time tracking data on its platform.

“We provided the services around the mapping of assets to a facility that was led by Ascot and brokered by Marsh,” said Costin. “We enabled all parties to track the vessels in the Black Sea, so they were completely aware of the exposures, and more importantly, the aggregation of those exposures.”

“As Russia continues to destroy, we are here to help Ukraine rebuild — rebuild lives, rebuild its country, rebuild its future,” – @SecBlinken during the Ukraine Recovery Conference. Read about how countries and others are supporting Ukraine’s recovery: https://t.co/JmtM41K4J2.

— Department of State (@StateDept) July 9, 2023

‘Data needs to be a living thing’

Insurance firms that contribute to the Ukraine recovery effort will likewise need powerful data and analytics capabilities to track risks. Costin said the insurance industry will need to be more agile to adapt the technologies needed to provide coverage.

“In the conventional insurance market, you tend to place a risk in the market, and the day it incepts is when the information is at its most accurate,” he said. “Over the next 364 days, it becomes less accurate, to the point that it becomes completely inaccurate at the point of expiry.

“I don’t think a $400-billion rebuilding project is going to be able to sustain that. Any measurement of risk and data is going to have to be a living thing. Insurers will need to understand, almost on a daily basis, what the exposure is. That can’t be achieved in the conventional way. It’s going to have to be done by tech.”

Around the Ukraine Recovery Conference, insurance giants Aon and Lloyd’s unveiled a collaboration with Vienna Insurance Group (VIG) to deliver fast-track access to enhanced reinsurance capacity to support domestic and international companies operating in Ukraine with manufacturing and construction risk exposure, excluding war cover.

Ukraine faces an uphill battle to raise investments, a battle it can’t win without help from the insurance industry. Data will be critical to providing insurers with more confidence to cover the risks of the rebuilding effort, Costin stressed.

“The ability to manage data and give much greater visibility [of the risks] to insurers will help them be more willing to commit capacity. It will make investment more likely because investors will take comfort from the fact that there is a process in place,” he said.

“And the governments, who I suspect will have to provide indemnity during the initial phase, will be able to step back and allow the private sector to become engaged, which will speed up the process.”

What are your thoughts on this story? Share them in the comments below.

The Hollywood writers’ strike could cost the entertainment industry up to $8 billion (£6.2 billion), according to an insurance expert, and it won’t be insurers that foot the bill.

“Losses from the 2007 to 2008 strike were around $2 billion,” said Ross Garner (pictured below), managing director-property & casualty at NFP. “With the amount of new streaming services that have popped up since then, which has led to an increase in productions, losses this time around could be around $8 billion, which would put it up there with major natural disasters, hurricanes and things like that.”

Writers’ strike – “There is no insurance product for events like this”

One of the downsides of major strikes is that there is very little to nothing that can be done for clients to mitigate the impact from an insurance perspective.

“There is no insurance product for events like this,” Garner said.

One of the reasons for this is that strikes are seen as an inevitable occurrence that should be considered when working in the entertainment industry.

There is also ambiguity around how long this blackout period will persist for, which would make writing coverage much more difficult and cost prohibitive.

“I couldn’t even imagine how an insurance product would be helpful in this situation, since the premiums would be astronomical,” Garner said.

Coverage like this would be hyper specific, which means that only few key businesses would be able to write a policy for situations like this.

Furthermore, while strikes do not happen on a consistent basis, the sheer amount of loss that is attributed to them can be vast.

However, there is insurance coverage for third party strikes that lead to a business disruption, such as having to rebook flights due to an aviation shut down that prevented a film crew from travelling to a foreign country for a union production.

“In this circumstance, the business disruption is widespread and much harder to rectify from a claims perspective,” Garner said.

Writers’ strike action – pandemic impact and building reserves

While Hollywood has experienced production halts in the past, notably during the 2007 to 2008 writers’ strike, the ongoing action that started in April is even more complicated due to it coming after a pandemic that shook the industry to its core.

“Businesses, especially independent contractors providing equipment and other services to film and television productions, blew through their financial reserves while the world came to a standstill during the pandemic,” said Ross Garner, managing director-property & casualty at NFP.

“Now, they are once again in a position where they can’t work and may be close to running out of funds once again, if they were able to recoup their losses during lockdowns.”
The first piece of advice US brokers can give to a client working as a contractor in the entertainment industry is to always have a cash reserve.

“Especially after COVID, unforeseen circumstances are a big threat,” Garner said. “In between strikes and a pandemic, I would definitely bring up a rainy day fund as an integral investment.”

On Week 10 of the writers strike, co-chair of the WGA negotiating committee, David Goodman, says there is no movement towards resolution. “The companies have to make the move.” https://t.co/Lfmz7YUCey pic.twitter.com/D722HpGqPh

— Variety (@Variety) July 7, 2023

Making sure a client has the right coverage in place

Beyond establishing robust savings, talking to a client and explaining the particularities of their broader coverage is extremely important in a situation like this.

This is particularly key for companies that have a costly inventory of equipment that may not usually be stashed in one place when things are business-as-usual.

“When these businesses are in production, a vast majority of their equipment is out for use on sets,” Garner said. “When a strike occurs and contracts freeze up, all of that expensive technology and machinery is just sitting in one place, which makes a more catastrophic loss imminently possible.”

Whether falling victim to a warehouse fire or theft, the amount of inventory that can be affected by a loss increases substantially.

It is of utmost importance for a broker to speak with a policyholder about how the chances of incurring a larger than usual claim is now a more pronounced threat.

“Now is a perfect time to look over the terms of a policy to make sure that it includes the updated risk profile that is associated with business disruption,” Garner said.

“This is especially true for more niche forms of coverage related to the entertainment industry, and having that specialized broker be able to assess all the variables of a potential loss scenario and safeguard a client from more economic hardship.”

Looking back to when he first joined the cyber insurance market in 2010, AXIS’ Andrew Maher (pictured) said that it has been incredible to see how the online threat landscape has changed as back then, it was privacy that the cyber insurance and security industries were selling. And the rapid evolution of cyber risk is unlikely to slow down any time soon, he said, not while the value of most organisations’ intangible assets continues to so dramatically outstrip that of their tangible assets.

Maher, who was promoted to head of cyber and technology, London at AXIS in September 2022, noted that he stepped into his new role at a fascinating juncture, with corrective market conditions starting to gently ease. It’s a fantastic time to be part of the London team, he said, because of how it fits into the strength of AXIS’ global cyber offering and because of the opportunity present in the market to “get out there and grow”.

Key cyber insurance milestones

Addressing some of the milestones he has seen mark the progression of cyber insurance in recent years, he noted the increased identification, implementation and maintenance of key minimum standards to which insureds are now expected to adhere. There is an increased understanding across the market that just putting a hard protective shell around businesses is not sufficient.

“So, it’s not just about having those different controls and securities in place, it’s having the understanding of them and how they’re working together within the network to the benefit not the detriment of the company,” he said. “The market all came together and pushed on certain minimum standards, on some harder than others, but those baseline controls such as multi-factor authentication for remote access, backup controls and security have been key.

“They’ve really become your cyber sprinkler system or seatbelt. They should be seen as bog standard and must be implemented which is why you’re now seeing insureds buying cyber insurance for the right reason – for true risk transfer as opposed to using insurance as their whole cybersecurity and incident response plan. Because insurance is not there to be the first line of defence, it’s there to be the safety net in the event of an incident.”

The changing nature of cyber ownership within businesses

Another trend which has been interesting to see develop in recent years is the changing nature of cyber ownership within businesses. While 90% of the time, he and his team will of course deal mainly with chief information security officers (CISOs), chief privacy officers and risk managers, cyber conversations have evolved to include a much greater variety of stakeholders.

Much of the focus within those meetings is around governance, he said, and it’s a very rare occasion now that he doesn’t hear that cyber risk findings are being presented to the board every quarter because it has become such a board-level issue. As a result, it’s a red flag to hear that any board isn’t discussing a company’s exposure to cyber risk because the risk has evolved so significantly.

“And it’s a D&O risk as well now,” he said. “We all know about cyber now so if the board isn’t requesting that training be provided or that cybersecurity controls be implemented then that could lead to some rather large D&O risks. It goes further than just your cyber insurance policy so it’s definitely a red flag if there’s no board-level involvement.

“It also comes down to where and who the CISO reports into because there have been studies to show that the verity of a cyber insurance claim is dependent on where the CISO reports into. It tends to be that if they’re reporting into the board, the less severe the claim is going to be compared to if they’re reporting to say the CFO. So, as an underwriter, if you hear they’re not reporting into the board regularly, it does set off alarm bells.”

Increasing understanding of the cyber risk among businesses

There is a generally increased level of awareness around cyber risk among businesses and Maher noted that this is being driven by a combination of increased education from the insurance market and the high-profile nature of the risk. Most days bring new headlines on a ransomware demand or a data breach, he said, so it invites substantial attention – while reports also consistently rank cyber as one of the top risks facing businesses today.

“In the wild, we still hear that ‘my third party handles my security’,” he said, “but if their balance sheet can’t support your loss, that’s what insurance is there for. There’s so much that comes into play and even for those who might not have so much of a network, we cover privacy.

“And privacy is making a big comeback. The litigation landscape for privacy at the moment is a bit of the Wild West with old legislation being looked at to try and shoehorn modern-day risks. There’s a lot more attention [on privacy] now, especially with biometric information being collected, and how cookies and website data are been collected too.”

Cyber insurance – demonstrably worth the paper it’s written on

Addressing whether the corrective market conditions of recent years might have put off businesses from purchasing cyber insurance, Maher highlighted that cyber insurance has proven conclusively that it’s worth the paper it’s written on. That’s not just from a claims payout perspective, he said, but also given the increased emphasis on cyber insurance as a service as well as a product.

From SMEs to multinationals, insurance companies have shown themselves to be willing and able to help insureds navigate their way through an incident. The work that cyber teams do to support insureds in the event of a claim should never be underestimated, he said, as the expertise and experience they bring to the table make all the difference for insureds during their time of crisis.

“We did see some clients walk away from the market over the last couple of years with the pricing correction that was going on, and some of those have looked to come back now,” he said. “There is always going to be a tipping point for certain sized companies, as to whether they take it on their balance sheet or do some risk transfer.”

This decision-making should be underscored by a deep-impact risk assessment so businesses can have a better understanding of what their true exposure is and the limits that they should be buying. This is where the broker really steps in, Maher said, as their communication is the key to ensuring that insurers can put together the right products that match the requirements of the business in question.

“We’re never going to sit still from that perspective,” he said. “We have our AXIS Cyber Insurance  product – ACI – which is aimed at over £2 billion and our AXIS Cyber Technology and Media – ACTM – which is sub-£2 billion. There are nuances and differences between them because of where we’re aiming them and the partners that we’re working with. We’re always trying to ensure that our products are forward-facing and address the issues that are actually affecting our clients. There’s never going to be a one-size-fits-all product because you just can’t treat every risk as the same risk.”

The role of the broker in cyber insurance solutions

The role of the broker in helping to create a sustainable and secure cyber insurance market where the coverage matches the insureds’ risks is critical. AXIS works closely with its strategic partners to bolster their understanding of and confidence around cyber, he said, including through holding full-day accredited cybersecurity courses that offer extensive training to partners’ new joiners and graduate employees.

“We want to ensure that everyone is educated and knows which threats our clients are facing, and what we’re seeing from our claims experiences,” he said. “That knowledge is being transferred to the brokers because this is something we’ve all got to address together. Brokers, underwriters and vendors all need to address the issues we’re seeing today – whether those are on the regulatory side, the litigation side or the threat actor side. Everyone working together is how we ensure that we can stay relevant and continue to deliver products that are actually meaningful to our clients.”