NEW AND EMERGING PRODUCTS
It’s not just insurance anymore
By Joseph S. Harrington, CPCU
More and more, you’ll find that new “insurance products” from commercial lines carriers and intermediaries include more than insurance. Indeed, insurance may not even be essential.
With abundant capacity and soft pricing in most lines, markets find that policy features alone rarely provide the payback they’re seeking in terms of market penetration and profit. Increasingly, they are looking to risk management, loss control, and claims management services to set themselves apart from competitors.
The trend is most evident in cyber insurance, arguably the most rapidly growing line of commercial insurance. Cyber risks are dynamic, varying greatly from one client to another depending on the characteristics of their IT operations, the value of their own data, their responsibility for others’ data, and the ever-changing threats arising from the web.
Decisions about cyber insurance—the selection of coverages, limits, deductibles, and conditions—are almost inseparable from decisions regarding IT operations—server locations, cloud storage, access authorizations, firewalls, encryption, and so on.
It follows, then, that cyber risk management and loss control services are often an integral part of a “cyber insurance” offering.
But that’s not the only line where risk services are part of the package. Whether it’s business interruption coverage for violent acts, liability coverage for sexual harassment, or the use of electronic sensors to alert insureds to potential losses, it is rapidlybecoming an expectation that an insurance product will include a service component.
Burns & Wilcox BreachAware
Burns & Wilcox has a new initiative that does not require the buyer to buy any insurance at all. The global brokerage recently entered into an exclusive partnership with BreachAware, a London-based cyber security company, to provide access to BreachAware’s proprietary risk mitigation tool.
BreachAware technology scans the web around the clock to identify compromised data assets such as company email addresses, user names, passwords, and personally identifiable information linked to employees. It transmits “action-oriented alerts” notifying users of the date and source of a compromise (such as a social media site, a web service, or an anonymous party) and the extent of the potential exposure.
“Actively monitoring and addressing potential issues is as vital to protecting a business as is cyber insurance coverage,” says David Derigiotis, national professional liability practice leader for Burns & Wilcox.
“This service allows producers to provide an additional solution to improve security—whether or not they have a cyber insurance policy with us,” he adds. “This service also helps us advise companies when it comes to making risk management decisions regarding privacy awareness, incident response policies, and much more.”
Aspen Insurance SSIMPLE™ platform
Aspen Insurance offers risk protection service through its SSIMPLE platform of cyber risk management applications, available to holders of primary level cyber policies on business placed through Aspen’s preferred set of distribution partners.
“Aspen Insurance developed the SSIMPLE platform with two objectives in mind,” says Josh Ladeau, Aspen Insurance global head of technological E&O and cyber coverage. “First, we seek to enhance the cyber security of U.S. businesses, a key competitive consideration in a market focused on the security profiles of commercial entities. Second, we seek to enhance the quality of our Aspen Insurance portfolio by providing layers of cyber protection to our insureds.”
The SSIMPLE platform addresses a wide range of privacy and network security concerns, including DNS security and 24/7 anomaly-monitoring services (featuring zero day protection). It also provides Office 365 security assessments, NIST 800-53 self-assessments, network perimeter vulnerability scanning, and incident responses, as well as technology to help detect data leakage resulting from adverse employee departures.
These solutions are integrated with client operations through support from Aspen Insurance’s team of in-house privacy and network security professionals dedicated to engaging with clients.
SSIMPLE services are combined with insurance that includes first- dollar (no deductible or retention) coverage for legal guidance, forensic evaluation, assistance with Bitcoin payments for ransomware, public relations, notification to affected persons, call center and credit monitoring services, and other expenses incurred following a cyber event.
“Many platforms offer wholly-outsourced solutions, with the potential for discounted pricing,” says Ladeau. “In contrast, cyber risk management is not a hand-off for Aspen. We’re hands on. Combined with our cyber insurance product, I believe the SSIMPLE platform represents an unparalleled value proposition for our insureds and their agents and brokers.”
AXA XL-Slice cyber policy for SMBs
A combination of cyber coverage and service is presented in a recent joint offering from AXA XL Insurance and Slice Labs, developer of what it calls its Insurance Cloud Services (ICS) platform, a foundation for digital insurance products.
Designed for accounts with less than $20 million in annual revenue, the AXA XL cyber coverage is offered with limits from $250,000 to $3 million for third-party claims and first-party loss mitigation of data protection and privacy risks.
Specifically, coverage extends to expenses incurred to notify persons affected by a breach and provide credit monitoring services to them, plus costs for data recovery, reputation management, loss of business, and extra expenses incurred to address a breach.
The policy also provides coverage for costs arising from cyber extortion threats (ransomware) and other breach-related liabilities, including regulatory penalties, violations of merchant services agreements, and violations of the European Union’s recently implemented General Data Protection Regulation (GDPR).
“This program provides small and medium-sized businesses with broad cyber insurance protection that the largest of companies rely on,” says John Coletti, chief underwriting officer of AXA XL’s North America cyber and technology insurance business.
“It also provides cyber security resources to help our insureds protect their revenue, profitability and customer relationships,” he adds. “Our customers are provided an individualized dashboard with an overall cyber risk assessment and scores along with benchmark scores of their industry peers across each risk category.”
Jimcor Agency’s CyberSolved
Cyber insurance has a reputation for requiring a complex and laborious application process.
But the inclusion of a cyber-risk service component allows New Jersey-based Jimcor Agency, Inc., an independent MGA and wholesaler, to underwrite its new CyberSolved policies with only four pieces of information: an applicant’s name, state of domicile, class of business, and annual gross revenue.
Moreover, says Joseph Schneider, Jimcor’s vice president and sales managerfor professional lines, “Pricing indications are delivered without an application, and the quote and binding process can be completed in just a few minutes.”
Jimcor says that the reason they can offer such streamlined underwriting and pricing—with no deductible—is that insureds under the program utilize CyberScout data security services as their first responder to a data breach or cyber loss incident. Formerly known as Identity Theft 911, CyberScout is a provider of services to detect, prevent, and mitigate cyber losses.
“The zero deductible feature encourages insureds to report a suspected breach and get the experts at CyberScout involved early in an incident,” Schneider says.
He adds that a CyberSolved policy is “always primary for cyber claims.
“The ‘other insurance’ clauses in some popular cyber policies make them excess over any other available coverage,” Schneider explains. “This creates an issue when a cyber endorsement has been attached to a businessowners or commercial general liability policy.
“The clarity of our insurance clause eliminates uncertainty among multiple cyber carriers after a breach.”
Hallmark Financial Services Energy Contractor Program
It can seem as though cyber insurance is taking up all the oxygen in insurance product development, but there are indeed new products outside the cyber realm.
Energy production is a volatile business, as the prices of oil and natural gas fluctuate wildly from month to month and year to year.
That volatility takes a toll on small contracting firms in the oil and gas sector, so Hallmark Financial Services’ P&C Contract Binding unit has recently updated its property and liability package, available through select wholesale brokers, for energy contractor accounts, mainly one- to three-person contracting teams.
Among other things, the program provides coverage for time element pollution liability and blanket additional insured liability on a primary and non-contributing basis.
“The past decade has seen dramatic fluctuations in oil prices, resulting in swings in production and exploration activity,” says Robert Fitzgerald, Hallmark’s senior P-C underwriter–Energy Contract Binding. “This boom and bust cycle has affected the rates and product offerings of insurance companies writing in this segment, making it difficult for contractors to accurately budget insurance cost.
“Our most recent revision updated the forms and coverages to the latest industry standards without having a material impact on our rates,” he adds. “Our rating structure allows us to maintain a competitive posture that supports small specialized oilfield contractors with coverages that meet their unique insurance requirements.
“We continue to match rate to actual risk, based on our experience and not on current market trends,” Fitzgerald says. “Our goal is to have a stable presence that insureds and agents can depend on for the long term.”
Navigators Allied Health Liability Program
One might not consider pollution liability to be a concern for healthcare facilities, but those who know the business know it’s a real exposure. So, pollution liability coverage is part of a new liability package policy for the allied health sector developed by Navigators, which recently entered into an agreement to be acquired by The Hartford.
The Navigators Allied Health Liability Program provides insurance under separate coverage parts for professional liability, general liability, and pollution liability, each with its own limit, coverage trigger (occurrence or claims-made), deductibles, and coverage extensions.
The base policy includes built-in additional coverages for legal costs related to alleged violations of HIPAA, supplementary payments for deposition assistance, and administrative hearings for defense of license, plus expenses for crisis management and product recalls.
The policy also includes a $250,000 limit for third-party claims related to network security and privacy.
“The difference between allied healthcare and other sectors is that other sectors have greater separation of their exposures,” says Linda Schultz, Navigators’ senior vice president, life science and allied health practice leader. “Exposures in the allied healthcare space blend into one another, making it difficult to determine under which coverage part a given claim should fall.”
Schultz notes that pollution exposures in allied health include contamination by biomedical wastes, ingredients in medications, and products or supplies spilled during transport, in addition to releases of pollutants at an insured’s owned or leased site.
“Pollution coverage for allied health is a little less intuitive,” says Schultz, “so it is not typically available on allied healthcare policies.
“However, since allied healthcare deals with chemicals, biohazard waste, transportation exposures, and residential properties in both highly populated and rural areas, environmental liability is an important coverage that can no longer be ignored.”
Innovative Risk Solutions, Inc. Landlord’s Protection Program
It’s not easy being a landlord, especially when it comes to having tenants pay for damage they have caused.
Innovative Risk Solutions, Inc. (IRS), a Florida-based MGA licensed in all 50 states and which also serves as a Lloyd’s correspondent, has introduced a program designed to take some of the friction out of landlord-tenant relations, and to allow the former to focus on providing good housing at a fair and profitable price.
Designed principally for mid-level and upscale apartment complexes of 100-500 units, IRS’s Landlord’s Protection Program provides coverage in its base form for physical damage to the rental structure caused by tenants.
In addition, IRS offers an optional excess damage protection endorsement that covers incidental damage by tenants to fixtures of a rental property, such as windows, doors, blinds, carpets, and appliances, as well as stopped toilets and clogged drains caused by tenant misuse or negligence.
In all, the first-party coverage features of the program reduce the need for security deposits, the need to track whether tenants have insurance coverage in force, the need to institute legal action against tenants, and the need to file claims against the landlord’s principal property insurance.
Another endorsement option provides coverage for loss to tenants’ contents, potentially eliminating another source of costly and contentious litigation.
“Rents are rising all over the country due to the pressure created from housing prices, and interest rates are rising as well,” says John S. Watt, IRS vice president. “There is a lot of competition, particularly in the middle, upscale and luxury unit complexes.
“Our program makes a landlord’s units easier to rent in that security deposits are reduced or eliminated,” he adds. “Furthermore, our program offers protection for the tenant as well in the form of contents coverage.
“With this policy, the landlord can offer a great place to live with convenience and protection.”
Vindati inland marine offerings
There’s nothing new about inland marine insurance, as such. It’s been around in one form or another from the earliest years of the U.S. domestic insurance industry, and has been established as a separate line of insurance since the promulgation of the Nationwide Marine Definition in the 1930s.
What is new is that advances in automation have transformed inland marine underwriting and distribution, which were among the last insurance operations to rely on manual processing. Carriers and intermediaries that may have balked in the past at investing in a line with low premium volume and high operational costs can now benefit from the relatively high margins it produces.
That’s the setting for the introduction of a new suite of inland marine products available to brokers from Vindati, an MGA based in New York City. The program provides instant customizable quotes using leadingtechnology, integrated data and analytic tools through a platform developed by London-based Innovisk, which includes Willis Towers Watson among its investors.
The Vindati program currently supports several of the specialized classes of property insured under inland marine: contractors equipment (generally mobile equipment), builders risk (coverage for buildings under construction), installation coverage (insurance for large equipment and fixtures as they are installed), and floater policies for small tools, which can be very valuable. Vindati also supports a farm and ranch program.
In the near future, Vindati plans to add transportation classes to the program mix, including coverage for motor truck cargo, warehouse legal liability, and ocean cargo.
“Inland marine covers dozens of classes of property that don’t fit well into a package property policy,” says Hugh Burgess, CEO and founder of Vindati. “The miscellaneous nature of this line makes inland marine perfect for insurtech applications.
“We serve as a bridge to technology from both the broker and carrier standpoint, which means we continue to have the broker needs in mind and are able to deliver results on behalf of carriers.”
For more information:
Burns & Wilcox
Hallmark Financial Services
Innovative Risk Solutions, Inc.
Jimcor Agency, Inc.
Joseph S. Harrington, CPCU, is an independent business writer specializing in property and casualty insurance coverages and operations. For 21 years, Joe was the communications director for the American Association of Insurance Services (AAIS), a P-C advisory organization. Prior to that, Joe worked in journalism and as a reporter and editor in financial services.