The insurance industry is witnessing a significant shift in professional liability risks, particularly in the realms of environmental, social, and governance (ESG) and cyber liability. Increased scrutiny on ESG compliance from shareholders and regulators has heightened the potential for securities class action lawsuits.
Concurrently, the surge in cyber threats, including ransomware attacks and biometric data hacking, has elevated cyber liability concerns. Despite these growing risks, the professional liability market has seen rate decreases due to new market entrants and intense competition. However, class action lawsuits and social inflation are prompting insurers to reconsider coverage limits and conditions. The SEC’s focus on mandatory cyber disclosures is further complicating the landscape, increasing the potential for fines and class action lawsuits for non-compliance.
As a result, businesses are urged to rigorously assess their cyber liability risks and strengthen network security. Understanding the coverage nuances of D&O and cyber policies is crucial, emphasizing the role of knowledgeable insurance brokers in guiding firms through these complexities.