Dutch risk managers agree cyber cover should be standalone rather than in existing lines

Leading Dutch risk managers have agreed with their colleagues in Italy and Germany that arranging standalone cyber cover is preferable to trying to include it within existing traditional lines, to avoid uncertainty and assure the CFO and rest of the board they are actually covered.

In the past, a good proportion of European risk managers have told Commercial Risk Europe during our annual Risk Frontiers survey they would like to see cyber included within existing lines and not sold as a new line of business.

A recent survey of German risk management association GVNW members, revealed at its financial lines conference in Cologne this March, however, found that a majority would actually prefer to arrange standalone cover.

Roughly the same proportion – two thirds – of Italian risk managers polled by Commercial Risk Europe at the ANRA annual general meeting in Milan last month agreed with their German peers that standalone is the best way ahead.

So it seems there is much debate within the risk and insurance community about how to develop the market for cyber risks.

A group of risk managers gathered for the Dutch leg of our European Risk Frontiers survey at Narim’s annual conference in Zaandam, Netherlands yesterday, unanimously agreed that standalone was the best approach.

“It is about clarity. Cyber is top of mind in the boardroom currently and you need to show that you are definitely covered,” said one risk manager with a Netherlands-based multinational company at the Dutch risk and insurance management association’s annual meeting.

“Elements of cyber are included within existing property, liability and other lines, but it is not explicit and very uncertain. I would rather buy standalone cover because it gives you that security and certainty. It also gives you the opportunity to use a different broker and insurers and find the best solution for your company,” said another Narim board member.

Narim’s annual conference takes place today under the leadership of new president Adri van der Waart, corporate insurance manager at Arcadis, who recently replaced Anne-Marie Schouw of Tata Steel after she completed her stint at the helm.

The Dutch risk managers we spoke to agreed that cyber capacity on offer is adequate, as long as risk managers are not looking for billions of euros of limit. They are, however, unhappy with the rising trend among insurers to add more exclusions to cyber policies.

“I think there is some way to go before we have a really professional wording for cyber,” said one risk manager.

“The main brokers have their own wordings and these are evolving. I saw only yesterday that one of the leading insurers has decided that social engineering such as phishing attacks and president emails are now excluded. This is an unacceptable escape as this should be included. The insurers should be looking to include as much as possible in their policies and offer us tailor-made solutions, not more exclusions,” said another Narim board member.

Generally speaking, the Dutch risk managers are confident they will not face a broad market hardening this year. The commercial and large corporate insurance market in the Netherlands remains as competitive as others in Europe. There are some limited exceptions, such as purely Dutch construction risks in certain sectors. But even the recent consolidation process – most recently AXA’s bid for XL and now talk of Allianz bidding for Zurich – has not left the Dutch risk and insurance management community worried about how they are going to complete their programmes.

The London market is particularly competitive. If a Dutch risk manager struggles to complete their programme locally at a competitive rate, they can always go to London to easily plug the gap, commented one risk manager.

But there does appear to be uncertainty over the future for the London market, given Brexit.

The Dutch risk managers are sceptical that simply setting up an operation in Brussels, Luxembourg or Dublin and then reinsuring the business back to London is really a credible long-term solution or acceptable to insurance regulators in the main EU markets.

Will the overall consolidation process combined with poor investment returns ultimately lead to a hardening in terms and conditions? Logic would seem to suggest so but evidence on the ground still does not, agreed the Dutch risk managers.

“My broker told me 20 years ago that my premium rate for construction insurance would go up the following year. I am still waiting for that following year!” said one risk manager.