Cyber Insurance: Your "Emergency Service" in the Face of Cyber Incidents
James Burns, Head of Cyber Strategy at CFC, believes greater education is needed on the implications of cyber risk. Simply put, Cyber insurance providers and brokers need to work together to organically grow the market. Education is key for this to happen.
My major takeaways from the article, Cyber Insurance - The "Emergency Service" For Victims of Cyber Incidents are as follows:
Cyber awareness is at a relatively low level (amongst UK small to medium sized enterprises).
The cyber protection gap is lack of awareness and education. Carriers, Brokers and agents play a pivotal role in bridging that gap.
The past ten years were focused on growing the market.
There are bucketloads of training and education for brokers.
In 2020, the game changed as loss ratios skyrocketed and attention was turned to rate correction.
Brokers had to explain to their clients why premiums soared, while others were deterred from selling the product due to the perceived volatility of the line of insurance.
Until a broker has walked a client through a cyber claim, cyber is seen as an intangible risk. It's difficult to contextualize what cyber insurance is and what it does until a claim has occurred and the dust has settled.
Brokers need to communicate with their carriers what they need from them in order to better support and protect their clients.
Things to ask for: Cyber claims case studies.
CFC has handled thousands of cyber claims and has a wealth of publicly available case studies for every industry sector.
Underwriters should be happy to discuss common objections and why those objections might be misguided.
Underwriters should also be more proactive in sharing relevant and timely insights to their broker partners.
The cyber insurance market needs organic growth again.
Market growth has been predominantly due to rate increases. Focus needs to be aimed at growing policy count.
"The 'hard market' saw tens of thousands of claims costing billions of dollars, which demonstrates that cyber insurance works - and it's worked almost too well from an insurer perspective, given some of the loss ratios encountered."
Cyber insurance is not to replace security controls, but to exist alongside them.
Education efforts are rewarded by increased confidence that brokers have when having conversations about cyber and in turn, educating insureds about their own cyber risk profile.
Cyberattacks are a form of crime in which cyber insurance acts as the emergency service for. It's not if, but when. And when 'IT' strikes, your clients will want to have a number to call. We need to get confident talking to customers about it again.
In conclusion, we as brokers who have a fiduciary obligation to our clients should take more time to seek out resources to educate ourselves on the implications of cyber insurance. This will allow us to speak to our clients with confidence and assure them that they're making the right decision when purchasing cyber. Insurance providers should be more proactive in sharing resources that will give their broker partners confidence in selling cyber and growing the market organically.
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