The frequency, sophistication and severity of data breaches is set to explode, according to a new industry report and for the savvy insurance broker, that means an increased opportunity to pitch cyber security insurance to clients – provided you know which ones to target.
Data breaches are a threat to every business, and a study from PriceWaterhouseCoopers finds that cyber crime increased 23% last year over the previous year. Yet, only one-third of companies have coverage that would protect them from the potential financial fallout.
While businesses in all industries carry some degree of cyber risk, some areas are more ripe for opportunities than others.
Christine Marciano, president of the specialised independent agency Cyber Data Risk Managers in the United States, said she sees healthcare and other sectors with mass amounts of personal data at increased risk of attacks that are "more sophisticated and targeted."
Marciano anticipated that law firms and large financial institutes like banks will also be increasingly at risk for cyber attacks and, therefore, prime targets for those selling cyber insurance.
“The attacks aren’t going to be one size fits all. [Hackers] will increasingly customise those attacks, and target places that hold large amounts of sensitive data,” Marciano said.
“Those will be the top targets for hackers.”
Marciano expects the cyber insurance market to grow next year as attacks increase and businesses both large and small start to appreciate their own risk.
“Companies are starting to become more aware of cyber insurance – that it exists and what it covers,” she said.
“It’s going to be about when a [cyber attack] is going to happen, no longer if. I think my business will continue to grow because organisations will realise the risk is always going to be here, and they should have coverage for it.”
However, brokers need to have more than just a marginal understanding of cyber risks in order to be successful. In an era of sophisticated risk, brokers will need to function as the absolute authority on cyber security.
“Brokers should start looking at the [cyber insurance] product, taking a look at the coverages that are offered and bringing the topic into conversation with their clients,” she said.
“A lot of brokers still don’t understand the product, and the broker mentality is that if they don’t understand the product, they won’t talk about it with their client.”