Medical Mutual institutes deductible to maintain embedded cyber security coverage
Company cites escalating claim costs, turbulence in digital security sector for the change
Cyber security coverage became part of every Medical Mutual policy in 2013 when the Company partnered with NAS Insurance Services to include $100,000 in free cyber coverage for all member- policyholders. At the time, data breaches and cyber- attacks were just beginning to become a problem in the healthcare industry and for American business in general. So the Company took the proactive step to provide market-leading coverage for the then- emerging new risk.
Since that time, cyber breaches and attacks have become both more frequent and more severe. In fact, by 2019, virtually all hospitals, including Medical Mutual’s insured hospitals, carried separate cyber insurance policies with substantial limits that reflect the potentially costly liability hazard. Yet while many other carriers dropped embedded cyber coverage altogether, Medical Mutual dropped the redundant coverage from its hospital policies only. It has remained committed to helping its independent physician practices and nursing homes guard against the increasingly prominent threat and has maintained that $100,000 of embedded coverage in their base policies.
Knowing this cyber security coverage is critical to our member-insured, physician-owned practices and nursing homes — which in many cases would otherwise be fully liable for the expenses incurred as the target of a cyber-attack — the Company absorbed a substantial 40 percent increase in the cost of the cyber program last year. And while the Company is steadfast in continuing to offer embedded cyber coverage, Medical Mutual is announcing two important updates. First, after consultation with Tokio Marine HCC, Medical Mutual’s current partner in providing this value-added coverage, the Company is instituting a modest deductible in order to continue the program. Second, the coverage will now include a war/cyber war exclusion.
Of the changes, Vice President of Marketing and Administration John Doyle said Tokio Marine HCC, and by extension Medical Mutual, simply cannot ignore the reality of the increasing frequency, complexity, and cost these cyber-attacks are having on the healthcare industry and that the modifications are necessary to continue the program.
"This year, if there were no modifications to the program, we were facing another 15 percent increase. Thus, after careful consideration, we have made the decision to introduce a modest deductible to help manage costs while ensuring the continuity of this vital program," said Doyle.
Therefore, pending state approval, any policy that renews on or after November 15, 2023, can expect to have a $2,500 deductible attached to the cyber policy, for which the insured will be responsible should they experience a breach and file a claim."We believe this deductible strikes a balance between providing a level of comprehensive protection against cyber-attacks and managing program costs effectively," Doyle said.
Doyle added that the Company is proud to continue offering this market-leading coverage to support its member-policyholders, who face financial challenges throughout their operations in today’s healthcare environment – and might otherwise forego cyber coverage due its high cost on the open market—were it not embedded in their fundamental Medical Mutual policy. For more information regarding cyber resources, log in to your member-policy holder account at and click the Risk Management tab, then select Cyber Resources from the dropdown menu.