The rise of cyber-insurance: how brokers can get to grips with the speed of industry change
by Heat Recruitment
With each new development, technology continues to revolutionise the way we live and work. For businesses, cloud computing and smart technology have simplified processes and enhanced communication, stripping away the need for excessive bureaucracy. However, with new technologies come a new breed of risks, that are not covered by traditional insurance policies.
According to data from Microsoft, the global cost of cyber-crime reached a mind-boggling $500 million, with a data breach costing the average company roughly $3.8 million. Nevertheless, when asked whether they had a cyber-insurance policy in place, only 38% of executives asked responded affirmatively.
It’s a worrying figure, but also a surprising one – after all, with the increasing volume and complexity of cyber-attacks taking place in the country, cyber risk cover has been targeted as a key growth market for UK insurers. Considering the sheer scale of the risk in our digitised global economy, companies remain drastically underinsured.
Even if we take into account the fact that it is a relatively new class of financial cover, the take-up of cyber-insurance should have grown at a much faster pace.
Ultimately, an ever-changing threat landscape is to blame for the lack of coverage taken out by corporations. As technology evolution continues to amplify risk levels and hackers’ techniques grow in sophistication, a myriad of research indicates executives’ awareness of the increasingly prominent issue.
However, as cyber insurers often have to rely on restrictive limits to control exposures, uncertainty surrounding the extent of protection gained from cyber-insurance policies has spurred reluctance from business leaders to buy this kind of cover at all.
If brokers are to bypass this challenge, they must educate their clients and properly illustrate what may or may not be covered in their cyber insurance policy. Typically, cyber-cover will offer protection in three main areas: event management, financial loss and liability, but you may further offer additional coverage across network interruption, system failure, cyber extortion, PCI fines and intellectual property.
As new types of cyber-attack occur with each passing day, it has become critical for brokers to keep their policies relevant and reflective of the current climate. Failing to do so could see clients missing out and suffering at the hands of cyber-criminals; a situation that could easily be prevented by a thorough analysis of the risk landscape ahead.
Furthermore, insurance firms must ensure that their clients are taking enough precautions to prevent a cyber-attack in the first place.
With the exponential rate at which cyber-crime has risen in the past few years, it doesn’t take a crystal ball to see that the growing threat is here to stay. Now more than ever, cyber insurance has become a critical component of any company’s risk prevention strategy. Currently, cyber-insurance cover tends to be after-thought for many small and mid-size organisations; a consideration only made with the power of hindsight. Until then, they have no choice but to give in to the hackers’ demands to regain control of their data. If cyber insurance policies are to help vulnerable companies protect themselves in the ever-evolving face of cyber-crime, brokers must pioneer the change.
If you’re looking for your next top-tier employee, or a candidate seeking a change of career, get in touch with our team at Heat Recruitment today. We’re experts in the Insurance sector and are here to help.
By Aaran Hodges