Insurance Journal and MyNewMarkets.com examined industries experiencing changes and expansions in the past year. Here are the remaining markets the top 10 sectors that just might deliver hot opportunities for agents and brokers in the property/casualty insurance industry in 2014. (View Part 1 of the Top 10 Hot Markets to Watch.

6.       Cyber Liability

One area ripe for market growth is the cyber liability sector.

Capacity in this marketplace has increased tremendously in the last five years, as has demand, but it is not keeping pace with what the insurance marketplace has produced. Instead, all that capacity is pushing rates down in a segment that has tremendous opportunity for — and evidence of — loss.cyber-theft

The year 2013 might be considered a “cyber tipping-point” — or the point at which businesses and governments finally realized the severity of the threats they were facing, according to Advisen, a New York-based commercial insurance research and data analytics firm.

In its annual survey on information security and cyber liability risk management, Advisen found that the vast majority of respondents (89 percent) believe that cyber and information security risks pose “at least a moderate threat” to their organization, but only 52 percent of survey respondents reported purchasing cyber liability insurance as a result of that threat.

The threat is real and increasing. Headlines from the massive Target breach, Nieman Marcus, and other high profile incidents are helping to push demand for cyber coverage, particularly among larger companies.

“[The buy rate] among larger companies was probably around 20 percent five years ago and is now in the 50-percent range, with at least 70 percent of the market considering cyber coverage,” says John Kerns, executive managing director for Beecher Carlson in the New York office.

Where the demand is not increasing as rapidly is among small to medium-size organizations. Information from research firm Advisen found that only 5 percent of companies with revenues under $5 million buy coverage.

Some agencies, like Connecticut-based Business Risk Partners, are encouraging small and mid-market clients to purchase coverage by emphasizing the add-on services that comes with it, such as risk management to protect data and crisis management if a breach occurs. BRP began offering standalone data breach/privacy coverage through Liberty International Underwriters in January.

Hiscox has also enhanced its coverage for small- to mid-size organizations with a cyber crime endorsement launched last fall.

7.       Fine Arts

Superstorm Sandy taught insurers and insureds a lot about the importance of protecting fine art collections. Considering fine art insurers reportedly faced claims of up to a half a billion dollars from art owners since the storm, according to a report by Reuters, it is no surprise that insurers are putting that knowledge to use.

Michelle Impey, fine art director for Fireman’s Fund, says disaster preparedness and proper storage of expensive art pieces, were a couple of the major lessons from the storm that ravaged New York in October 2012. But Sandy also reinforced the fact that insurers and insureds need to work together to protect these high value “passion investments”. fine-art

“Everyone says with insurance you don’t realize how valuable it is until you’ve experienced a loss,” says Impey. “So certainly for those who have experienced a loss, unfortunately, they’re going to be thinking about it.”

A number of insurers have launched new and enhanced coverages for the fine arts segment this year, including:

8.       Marijuana

The marijuana industry is turning over a new leaf, and there is plenty in the pot to go around. Last year, Colorado and Washington State’s voters approved the sale of marijuana for personal use. In January — the first month of Colorado’s legalized retail sale of cannabis to those 21 years or older — customers spent more than $14 million purchasing marijuana or related products from state licensed facilities, according to information from NORML, a non-profit working to reform marijuana laws nationwide. NORML also reported that as of mid-March, more than 150 licensed retail facilities were approved to operate in the state and that number is expected to grow.

Washington State received nearly 1,700 business license applications from people seeking to grow, process or sell cannabis during the first month of the new recreational marijuana law, according a report by the Associated Press. Marijuana

Nationwide, 20 states and the District of Columbia have approved the use of marijuana for medical purposes and so far this year, California, New Mexico, Alaska, Florida, and New Hampshire are reevaluating marijuana restrictions either for medical or recreational purposes.

So what does all this mean for the insurance industry? New business opportunities abound and new products are needed. Many exposures go into the growing, selling and storing of marijuana and businesses are hungry for specialized insurance policies that can protect them from carrying such a controversial product. There can also be legal issues for dispensary and retail store owners surrounding federal vs. state laws.

MMD Insurance, a specialist in insuring marijuana industries, launched a products completed operations with health hazards coverage and removed the “marijuana and its derivatives” exclusion explicitly and in writing. MMD’s National Services Director, Mike Aberle, says the removal of the exclusion gives manufacturers and products “one more legal leg to stand on.”

9.       Weather

Almost every business, in one way or another, is affected by weather. And as extreme and unpredictable weather continues to disrupt businesses and bring big losses to the insurance industry, underwriters and the weather technology industry have stepped up their efforts in deploying more accurate weather prediction models.

So far this year, severe winter weather has totaled more than $1.5 billion in insured losses from about 175,000 claims and 2014 is expected to be the fifth costliest year in the last 34, according to estimates from the Insurance Information Institute. Winter losses in 2013 totaled $2 billion. severe-weather

Creative insurance products have helped insureds deal with some of the business interruption and business income losses that can result from weather.

Christian Phillips, contingency underwriter for Beazley, says the big cost to businesses from severe winters like this one can come from snow removal and event cancellations. Last year, the insurer expanded its Weather Guard contingency coverage to the United States to help businesses against the business risks of extreme weather. The coverage assists clients to develop weather-related sales promotions, stabilize revenue or contain costs.

Demand has increased for the product this year because clients are looking for ways to protect their balance sheets, says Phillips. The company uses a meteorological database with more than four decades of data and information from more than 5,500 weather stations nationwide to help insureds monitor perils that could interrupt or cost them revenue.

Phillips says with issues like rising sea temperatures, the polar vortex, and increased heat that leads to drought — just to name a few — more clients are going to rely on insurance to keep their businesses stable through unpredictable weather patterns.

“There’s no indication that it’s going to change… if anything we’re going to see more increased extreme weather conditions,” he says.

10.       Medical Technology

Technology has become an intrinsic part of modern medicine, but the convergence of technology and medical advancements are leading to a new world of risk that insurance underwriters must solve.

Implantable medical devices (IMBs) now use wireless connectivity. New technologies such as long and short range wireless communications, cloud computing and information security can now connect to many medical devices such as patient monitors, wearable devices including those which regulate and monitor heart rate, as well as online self-diagnostics and medical apps.

“The introduction of remote access to these types of devices has clearly presented the issue of hacking in a new light,” says Graeme Newman, director at CFC Underwriting, a specialist lines UK-based underwriting agency backed by a number of Lloyd’s syndicates.

Technological developments such as 3D printing are also making a mark on the medical industry. In 2013, scientists from Cornell University successfully created an artificial human ear by printing it on a 3D printer. Many speculate that technology could pave the way for purpose-built replacement organs in the near future.

But using such modern-day medical device technologies doesn’t come without risk. 3d-printing

“Connecting our bodies and DNA to the Internet exposes a whole new world of risk, not only for the user, but for manufacturers, developers, software companies and even back bedroom coders who may be unaware of the consequences of their personal projects,” Newman says.

Within as little as five years the world could see the creation of products and medical device technologies never before imaginable.

Some insurers, such as Berkley Life Sciences, Travelers, and ACE, are forging a coverage path for life sciences companies, which could be a predictor as to what markets are willing to cover these risks as they evolve.