Protecting Retail Businesses after the Liability Shift

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The October 1st deadline for EMV liability shift came and went quietly compared to the months preceding. It was the deadline for retail merchants who accept credit and debit cards to migrate systems to the new EMV “chip and PIN” card platform, and of course for issuers of credit and debit cards to replace those cards with new ones including the embedded chip. But, as we see time and again, plans and reality often do not align.

Reality in this case is the fact that many merchants, for a variety of reasons, haven’t upgraded their point of sale technology to accept chip cards. And there are a number of card issuers, who are still working to issue the new cards to consumers.

Unfortunately, these delays may not change the losses faced by merchants who have not upgraded to EMV-compliant POS systems or for those who have, but continue to use the traditional magnetic stripe swipe technique instead of the “chip dip” method.

But, merchants who haven’t yet upgraded shouldn’t lose all hope. The good news is that, even while exposed, merchants are still insurable. Liability/loss coverage is possible by working with the right underwriters who can tailor and modify coverage for the potential increased risk.

Here is what merchants not yet EMV-compliant can do right now to best present themselves to insurers, to gain liability coverage in the EMV world:

  1. Don’t wait until you’re EMV-compliant to begin insurer conversations – Conventional wisdom might suggest the merchant to wait until they are fully compliant before having a conversation with a broker. Don’t do this. With continuous pricing increases in the market, brokers can help normalize premiums and produce viable options for merchants if merchants begin conversations now, and demonstrate intent strategy to becoming compliant.
  2. Have a plan in place with a clear timeline and milestones – Brokers and prospective carrier partners can have confidence in spending the time evaluating liability coverage options when merchants are able to present EMV migration plans with as much detail as possible. What are the barriers to the merchant being fully compliant now? What are the plans to overcome those barriers, and on what timeline will that happen? These details are vital to helping merchants secure coverage while still in the migration process.
  3. Find a broker that specializes in the topic – The underwriting information required for an organization looking for broad and effective policy language can be extensive and labor intensive to collect, so a well-prepared submission guided by consultation from the broker goes far beyond just the paper application. Choosing a broker that is active and proficient in the overall cyber liability market will better ensure that the merchant is differentiated and distinguished, leading more effective policy options.

Despite what most classify as “hardening market conditions,” the cost of insurance still tends to be a fraction of what an insured merchant would spend in out-of-pocket costs, post-October 1st. Brokers and carriers are ready to have conversations with merchants about how to protect their businesses in this new reality, and the best foot forward for merchants will be one that is on a defined path towards EMV compliance.


About the Author

Shannon Groeber has over twelve years of experience in the insurance industry focused exclusively on complex Cyber and E&O placements, and related exposures including Media Liability, Intellectual Property Infringement and Miscellaneous Professional Liability.


About JLT Specialty USA

JLT Specialty USA is the U.S. platform of the leading specialty business advisory firm Jardine Lloyd Thompson Group. Our experts have deep industry and product experience serving leading U.S. and global firms.

About Jardine Lloyd Thompson Group PLC.

Jardine Lloyd Thompson is one of the world’s leading providers of insurance, reinsurance and employee benefits-related advice, brokerage and associated services. JLT’s client proposition is built upon its deep specialist knowledge, client advocacy, tailored advice and service excellence.

JLT is quoted on the London Stock Exchange and owns offices in 40 territories with more than 10,600 employees. Supported by the JLT International Network, it offers risk management and employee benefit solutions in 135 countries.


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