Broker lifts lid on Australia's booming cyber security sector

Broker lifts lid on Australia's booming cyber security sector | Insurance Business Australia

Broker lifts lid on Australia's booming cyber security sector

The federal government’s $10 billion investment in cyber preparedness is creating lots of work in the tech sector with flow on impacts for Australian brokers, says Geoff Stooke (pictured above), account director at Modern Risk Solutions.

“With $10 billion worth of government contracts coming down the line for cyber security we’re seeing an enormous amount of work in that space,” said Stooke, whose specialist brokage finds investors and provides risk advice and insurance offerings for startups and new and scalable projects. His firm is part of Honan Insurance Group.

Australia’s biggest ever investment in cyber mitigation and prevention was announced by the then Treasurer Josh Frydenberg in the former government’s last budget in March. The money will be spent during the next decade under a program called Resilience, Effects, Defence, Space, Intelligence, Cyber and Enablers (REDSPICE).

“We’re at the tip of the spear of it given the work we do already within the tech sector from a risk and insurance perspective,” said Stooke. “We’re getting a lot of clients with military and defence, so that’s quite an interesting area.”

One of the broker’s challenges is ensuring clients have sufficient risk management safeguards in place to warrant cyber coverage.

“To get the insurance across the line and get a policy in place we’re having to work not only with the clients but also with the insurance companies to improve risk and then make a compelling reason for the insurers to get that comfort level,” he said.

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Stooke said cyber insurance coverage is now a very different product compared to 10 years ago when it was “almost like an add on product.”

“What we’ve noticed more recently is that to get the insurance is becoming increasingly difficult and the expectation is that by the time the insurance companies are putting their capital around such a risk that the clients have taken every conceivable opportunity to de-risk themselves,” he said.

Stooke said that includes working with cybersecurity firms and carrying out penetration testing to make sure all IT systems are using best-in-class and best practice cyber security. He said firms need to demonstrate they are protecting their data, employees and their clients’ information.

However, the cyber security insurance space, he said, is currently a very challenging sector of the market. 

“We’re obviously conscious of cyber insurance becoming a distressed area,” he said. “There’s been an increase in ransomware attacks, and I don’t think the industry has a really strong foothold on how to manage that.”

One of Stooke’s speciality areas as a broker is digital health. In recent months, he’s noticed an uptick in cyberattacks.

“That’s proven to be a really difficult area,” he said. “Health seems to be one of the number one targets for malicious hacking and unauthorized intrusions because health data is the kind of information that these people are going for.”

However, he expects the government’s multi-billion investment in cyber security to bring benefits.

“I think we’re certainly seeing a lot of new clients in cybersecurity because it is a high growth area,” he said. “The government is spending to help advance cybersecurity in Australia, and I think that’s probably driven by geopolitical issues but it’s obviously going to benefit everyone once we have improvements, whether it’s in encryption or other areas.”

The investment is bringing Stooke and brokers like him lots of work.

“I’m probably working harder than ever to be honest,” he said.

In October last year, the Australia-based international brokerage Honan Insurance Group announced its acquisition of Stooke’s Melbourne-based firm.

Stooke described the last 10 months in very positive terms.

“Having different departments and different support wrapped around what we’re doing so we can focus on the client stuff has been a significant change for our team, which is good,” he said.

The Honan network also allows Modern Risk to pursue clients across a wider geographic footprint, in New Zealand and across Asia.

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“I’d say the advancement in resources has been amazing,” said Stooke.