Acordia's latest insurance deal brings it a specialty agency with a focus on selling insurance for electronic and Web-related risks.
The deal, which was announced Thursday, was for Sacia Risk Solutions in Seattle. The company will be renamed Digital Risk Managers and operate as a separate underwriting organization from Chicago-based Acordia Inc., the country's largest bank-owned insurance agency operation.
Banks, insurers, retailers, manufacturers, and technology companies all need protection against the damage done to themselves and third parties by breaches in their electronic systems, according to Anne DeVries, who is now a senior vice president and director of operations at Digital Risk.
The agency's flagship product, called WebNet Protection, is "really geared for any business who relies on the secure and reliable operation of their computer systems to conduct their business," she said.
Ms. DeVries came from Sacia, where she was a managing director of underwriting before the purchase closed March 1.
Digital Risk is a managing general agent, which means it both sells and partially underwrites products.
After being touted as a hot insurance product just a few years ago, the market for these kinds of policies took a hit after Sept. 11 when insurance capacity shrank worldwide, Ms. DeVries said. Not only was there less capacity to write new products, but also the rising prices in other lines made clients less likely to buy newer types of coverage, she noted.
However, the overall market is about $125 million to $150 million right now, and she said it could be "a multibillion[-dollar] premium product in the next five years."
In fact, Ms. DeVries said, she has seen increased interest in the last six months as companies become more educated about their exposure to network and Web risks. In addition, she said, new privacy regulations and legislation have also encouraged businesses to look for insurance to protect themselves in case information gets out of their systems.
Ms. DeVries said that in addition to protecting companies if they are sued because information is taken from their systems the insurance also helps cover first-party costs, such as business interruption for a retailer whose site goes down during the Christmas shopping season or the cost of a public relations campaign to tell customers about a security breach.
Digital Risk has about $3 million of written premium, down quite a bit after 2002 when capacity shrank, she said. Its biggest competitor is the New York insurance giant American International Group Inc., which sells tens of millions of dollars of the product.
Ms. DeVries said that being owned by Acordia will help Digital Risk compete with big-name insurers because the parent can provide capital, expanded distribution, and a strong brand.
John Sacia, the former chief executive officer of Sacia Risk Solutions, has been a managing director in Acordia's Northwest operation since last May. Ms. DeVries said this relationship helped bring about the deal.
Digital Risk, she said, lets Acordia grow in a specialty on which it had not really focused. The Seattle company is "an internal resource that all the producers can tap into," she said. It will keep its client base, which includes agents and brokers beyond Acordia.
This deal caps a series of acquisitions Acordia has completed since May 2001 when it was bought by San Francisco-based Wells Fargo & Co. The price paid for Sacia was not disclosed.
