Hiscox Launches Product to Counter Growing Terror Threats

PRODUCT: Security Incident Response

COMPANY: Hiscox

BEST RATING: A (Excellent)

AVAILABILITY: Coverage is available through appointed agents and brokers.

FOCUS: Over the last five years, Hiscox observed an uptick in client requests for access to response firms for international incidents. But the 2016 Brussels airport terrorist attack was the tipping point that made Hiscox realize the kidnap & ransom market was in need of a new kind of product.

“After that attack, we received calls from our clients saying, ‘We have a kidnap & ransom policy with Hiscox and we know it doesn’t respond to this, but we have employees who are supposed to be at the airport—can you help us find them?’” recalls Kevin Henry, deputy chief underwriting officer for Hiscox Special Risks. “It made it clear to us that these types of situations occur freuquently and it was something we needed to build into a policy.”

Security Incident Response helps businesses protect their people, operations, brand and reputation by complementing existing business security resources or acting as a standalone security function. The product equips businesses of any size with accessible incident response, crisis management, strategic advice and recovery services, and it responds to a variety of trigger incidents: threats of criminal, political, terrorism and political violence risks; information risks such as cyber threats; and kidnap, detention and extortion risks.

Since its rollout in Europe earlier this year, Security Incident Response has been a different type of sale, Henry says, because the product is different than the typical insurance policy a risk manager would buy. While a risk manager may find the policy expensive, security teams can offer a perspective that justifies the cost.

“We find the sale is successful when it’s a joint discussion with the insurance purchaser and people who are responsible for security or responding to an incident,” Henry says. “And they are often two different people. When both sides are involved in the review of the product and the costs, then we have an almost 100% hit ratio. If the insurance purchaser is the only person who is reviewing the product, they generally are under a tight budget and will say it’s not worth the money.”

UNDERWRITING: Hiscox uses the same information to underwrite a Security Incident Response policy as it does for a special risk policy, including number of employees and revenues, with a focus on international exposure.

“Where do you travel and where do you have people? If they’re in high‑risk countries, the premium’s higher. If they’re in low‑risk countries, the premium’s lower,” Henry explains.

Hiscox offers credits if the insured has a full‑time security department or full‑time security director, and if the insured has a comprehensive security plan in place.

MIMINUM PREMIUM: $20,000.

TARGET: So far, Henry says the primary target for Security Incident Response is corporations with a full‑time security director. Most policies have a three‑year term, so the financial certainty the product provides is a big selling point with security directors.

“They’ve said to us, ‘We have six to eight emergencies a year, and we never know how much it’s going to cost us to respond with different specialist firms to help us. We can’t budget for that,’” says Henry, who notes that nongovernmental organization relief groups and universities have also purchased the product. Many of these organizations don’t have a security team but face similar types of threats—and don’t know who to call when a crisis hits.

COVERAGE TERRITORY: Hiscox has filed Security Incident Response in all U.S. states and Washington, D.C. Coverage territory is worldwide.

CONTACT: Kevin Henry, chief underwriting officer for Hiscox Special Risks; 610-213-3133.

Katie Butler is IA editor in chief.