Management Liability A Changing Market Simon Amos Management

Management Liability A Changing Market Simon Amos – Management Liability Underwriter 1

A Very Brief History • D&O Only • A profitable cover in the SME space • Lends itself to autonomy and e-trading - Juniorisation • Additional covers such as CLL and EPL are added to create a management liability package, often for no charge • Claim frequency increases especially in respect of EPL and Crime covers. • Established markets begin to react with rate increases and reduction of capacity • Covid-19 pandemic escalates the onset of a hard market 2

Covid-19 • The cover is there to protect the decision makers. • Unprecedented – Decisions being made in good faith. Not just day to day business decisions. Unknown consequences. • Adequacy of Business Continuity Planning? • EPL – The gathering storm – Redundancies, changes to contracts of employment • Increased scrutiny – employees, shareholders, clients etc • Insolvency – Leaving directors exposed (Insolvency Act Suspension) 3

The market reaction • Increased premiums • Reduced capacity • Insurers are inconsistent, stretched and fearful • Insolvency exclusions and reduced cover • Increased retentions • Overseas subsidiaries and US exposure • The SME Market – Broad brush approach 4

The Beazley Approach • Product was launched in 2018 • Legacy book has less affect on underwriting strategy • Happy to coverseas subsidiaries • Happy to consider clients with US exposure including US EPL • We like to underwrite – There are good and bad risks within every industry • Free legal helpline – Clyde and Co 5

Cyber Beazley Breach Response Cyber

Understanding the policy… three towers of coverage £ 100 k 25, 000 people £ 500 k 7

What is going on?

What cyber risks are • Human error • Paper as well as electronic • Typically non-targeted e. g. o Midlands Broker (from Chicago) o Iron Foundry 9

Covid activity – known phishing campaigns against home workers • COVID-19 themed emails o attacking a known Microsoft vulnerability o triggering viruses to steal bank details • Emails with links to fake Centre for Disease Control (CDC) websites which solicit user credentials and passwords • phony customer advisories with updates on service disruption due to COVID-19 and leading to malware download • Phony emails from the government or the World Health Organization, leading to malware download • COVID-19 tax rebate with a link to a fake website that collects financial and tax information from unsuspecting users. 10

Covid activity – what to do beforehand • Raise awareness of COVID-19 themed phishing attacks • Make sure you set up strong passwords (preferably two-factor authentication) • Disable USB drives • Provide tips on the identification of phishing • Ensure that all provided laptops have up to date anti-virus and firewall software • Encrypt data at rest on laptops used for remote working given the risk of theft 11

What to do?

Vendor Engagement – getting started Typical engagement scenario without BBR Services Research Vendors Establish Contact Interview Vendors Negotiate Terms Commence Work 13

Vendor Engagement – getting started Typical engagement scenario with BBR Services Contact BBR Services Commence Work 14

Ransomware

Ransomware • If you pay Marked as payer Key might not work Data unstructured OR • Shut down/Clean backups Precautions Back up to hard drive Back up to outside your network Use email sweepers Simulated phishing attacks If infected turn off internet 16

24% of all ransomware incidents reported to Beazley were found to have started with an attack on an outsourcer

Resources https: //www. ncsc. gov. uk/training/top-tips-for-staff-web/story_html 5. html We will send more

Questions The descriptions contained in this communication are for broker preliminary informational purposes only. Coverages are underwritten by Beazley syndicates at Lloyd’s and will vary depending on individual country law requirements and may be unavailable in some countries. The exact coverage afforded by the products described in this brochure is subject to and governed by the terms and conditions of each policy issued. Beazley Solutions Limited is a service company that is part of the Beazley group of companies. Beazley Solutions Limited has authority to enter into contracts of insurance on behalf of the Lloyd’s underwriting members of Lloyd’s syndicates 623 and 2623 which are managed by Beazley Furlonge Limited. Beazley Solutions Limited is an appointed representative of Beazley Furlonge Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the UK (ref 204896) in its capacity as insurer.