Karl Pedersen is senior vice president of cyber and errors and omissions coverage at Willis, a combined role that reflects a shift in focus for E&O coverage. In the past three or four years, he said, liability for professional services has increasingly centered on data and privacy loss.
“You have a perfect storm,” he said of the forces facing such companies, especially in technology and among those offering new media services. There are “myriad multitude of state and federal laws” regarding notification and investigations in the case of loss or breach and, at the same time, advancements in malicious software.
“I applaud insurers who are writing policies with so many unknowns,” he said.
Companies such as Apple both produce a product and aggregate data. It’s in the second capacity that, like any third-party vendor, the company can use a blend of cyber and E&O coverage.
Technology service providers are also more routinely being asked to provide evidence of higher coverage by their clients, Willis said.
The broker’s Marketplace Realities 2015 report forecast flat premiums to a 5 percent decrease for companies with good loss profiles, while those with poor experience or in difficult sectors could see anywhere from a 5 percent decrease to a 20 percent increase in E&O policies next year —and even 40 percent for some POS retailers.
Another cause for consternation with regard to cyber is the evolution in coverage for bodily injury caused by non-physical damage, and its implications for E&O. Malware could cause injury with medical devices, cars that have internet access or even an incident like the Sony hack, Pedersen said.
