Media Firms Could Face Insurance Woes in 2012

U.S. communications, media, and technology (CMT) companies can expect their insurance market conditions to further deteriorate in 2012, continuing a trend that began in the second half of 2011, according to a report published by broker Marsh.

Large natural catastrophes in 2011 affect many CMT supply chains and property exposures. The most notable was the earthquake and tsunami in Japan. This has prompted insurers to begin raising rates for companies in the sector, according to Marsh’s report, “Navigating the Risk and Insurance Landscape: U.S. Insurance Market Report 2012.”

Marsh’s U.S. CMT clients renewing their insurance programs in the fourth quarter of 2011 generally experienced more moderate rate decreases than in the year prior and in other cases flat to slighter higher rate hikes. On average: property insurance rates were down 3 percent; general liability insurance rates were up 1 percent; workers’ compensation rates were down 2 percent; directors and officers (D&O) liability rates were flat to down 10 percent; and errors and omissions (E&O) insurance rates were down 5 percent.

Tom Quigley, U.S. Leader of Marsh’s CMT Practice, believes that insurers will likely seek to increase rates for CMT companies in 2012.

Marsh’s report noted that exposure to cyber security lawsuits will likely increase for CMT companies that experience a cyberbreach as a result of a recent U.S. Court of Appeals for the Ninth Circuit decision. The decision, Krottner v. Starbucks Corp., gives plaintiffs whose personal information was stolen but not yet misused more latitude to seek damages. Rates for privacy and cyber insurance increased in the fourth quarter of 2011.

Topics USA