Cybersecurity liability emerged as the biggest perceived risk in the coming year (80%) among U.S. directors and officers (D&O) surveyed by Willis Towers Watson, ahead of claims by employees (55%), and regulatory and enforcement (48%).
55% of respondents said that their organisation had experienced a lawsuit or demand by a current or former employee. The report also found a “significant” number of unreported claims that is “concerning and could jeopardise coverage due to late notice.”
“It is not surprising to see cyber risk ranked as the top concern,” commented Rob Yellen, Executive Vice President, D&O and Fiduciary Liability product leader, FINEX NA, WTW.
“With today’s dynamic threats including unprecedented regulatory complexity, like the new GDPR and the California Data Privacy Protection Act, combined with the potential for a bet-the-company crisis resulting in severe financial and reputational harm, cybersecurity has been elevated to a top risk management issue facing directors and officers today.”
Elsewhere, respondents said D&O premium rates and any insurance program cost changes over the past year were primarily driven by company financial performance (39%) and industry risk profile (37%).
Less than 30% felt that cost changes were due to insurance market competition, suggesting that “market competition in pricing is less of a factor than it has been the last few years.”
58% of companies ranked obtaining more favorable policy language as the most important change to their insurance program this year.
Looking ahead, coverage for investigations, including investigations of the organisation itself, ranked as the most important primary coverage issue over the next three years.
“Surprisingly, 77% of respondents consider entity investigation coverage important. Although, current purchasing habits do not appear to be aligned with that concern,” the report noted.
“The survey confirmed that D&O insurance remains an important tool for protecting organizations and their leaders,” said Andy Doherty, Executive Vice President and Thought & Product Leader for FINEX NA, WTW.
“Additionally, while containing D&O insurance program costs has always been a high priority, our results reflect that enhancing coverage remains a top priority, too.”
