Cyber insurance has traditionally been associated with hacks and data-loss, but with the pace of technological change in today’s world, this definition is fast-becoming outdated.
“There’s a perception issue with the word cyber,” Ben Hobby, partner, RGL Forensics, told Insurance Business.
Cyber is closely associated with data-breaches, largely because of where the product began, Hobby explained.
“But we need to get away from that – cyber is so much more than that,” he said.
Because cyber is such a hot topic, and in the face of a digital world that is moving so quickly there is an expectation that the insurance market is going to hit the ground running and respond to changes almost instantly – and that’s “certainly not happening”, Hobby said.
“I think we have to take a step back and just remember that this is quite a young insurance market,” he explained, adding that the property market, for example, has been around for several hundred years.
The newness of the cyber market means that often companies are not properly informed as to the type of insurance that they need, or indeed what they already have – leading to a knowledge gap.
So who should lead the charge in educating clients on what they need?
“I think the market has the responsibility for it, I don’t think it’s one particular segment,” Hobby said, adding that this includes, brokers, insurers and even service-providers.
“I do see service-providers, and IT forensics companies, very much being a part of that. Because when a claim happens, the service-providers have got to move very quickly due to that crisis management element,” he said.
In a marketplace where clients may be unsure of the products that they need, and the risks that they might be facing, how can brokers sell cyber policies?
“I think the better way of dealing with it is trying to come up with scenarios that, to an extent, scare the business,” Hobby said.
Many companies have potential gaps in their insurance coverage, which may not pick up certain costs or issues that arise from a cyber event, and which they may not even be aware of.
Brokers should tap into these gaps, Hobby advised.
“If you’re talking to a financial director, you always want to see the lights coming on in their mind that say, ‘we’ve got an exposure there that we’re not dealing with’. Once you get that hook, you can then start to put together the engagement, because you’re starting to put together that business case,” he said.
And building the business case is pivotal to getting buy-in from the c-suite.
To do this, brokers and insurers must help clients to realise where their exposures are, and where these sit within their current insurance programme – or, more importantly, where they don’t.
“That is, I think, the key to getting greater take-up on policies,” Hobby said.
Taking a wider view on what cyber actually encapsulates is also key, Hobby explained, adding that he has previously described cyber as “anything relating to computers or the internet”.
This, he admits, is a pretty wide-ranging definition: “But when you look at the various types of risk that these products are seeking to cover, it needs to be,” he claimed.
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