Cyber coverage for the cost of a coffee?

Can this help brokers sell cyber to SMEs?

Cyber coverage for the cost of a coffee?

Cyber

By Daniel Wood

According to small business owners, the high cost of cyber coverage is a big reason why many decide not to buy it. The softening market is unlikely to change this. Some estimates suggest the average cost of cyber covers for an SME can amount to a few hundred dollars per month – money these businesses aren’t willing to spend on more insurance.

In response, some firms are starting to offer more cost-effective cyber coverage options.

Allianz Partners launched allyz Cyber Care in Europe last year and expects to bring this offering to Australia and New Zealand “very soon”. Rather than focusing on preventing attacks on the business, this coverage protects individuals and their devices from cyber threats.

“I think personal cyber risk is probably the biggest risk that all of us face,” said Vinay Surana (pictured above), Allianz Partners’ regional managing director for the Asia-Pacific, Middle East and Africa.

He said this offering aims to “substantially prevent or reduce” the possibility of someone’s identity or data being stolen and exposed.

“The idea for a solution like this is to embed it with our B partners,” he said. “So it could be an airline, it could be a bank, it could be a broker,” he said.

Surana also suggested that the cover could help overcome SMEs’ reluctance to spend big on cyber coverage. 

“[Cyber] Solutions are available for corporates today but that requires a lot of money,” he said. “In our corporate environment we are all sitting behind a firewall and we are protected.”

The aim, he said, is to provide cyber coverage for roughly the cost of a cup of coffee, US$3 to US$5, per month.

“We want to launch an allyz cyber solution where we can provide prevention capabilities for an individual at the cost of a cup of coffee a month,” he said. “For me, that price point is very important because if it is too expensive, then people will not buy it.”

There will be various levels of purchasable cover, he said, but the prevention offering and helpline “will be covered by the price of a coffee”.

However, he said that price point would first require a “critical mass” of users to sign up. He suggested that number could amount to many millions of insureds.

Mobile phone vulnerability

The cover would focus on a key vulnerability area: mobile phones.

“That mobile phone that we all use is probably the place where we are the most vulnerable,” Surana said.

The aim is to reduce vulnerability by up to 70% and offer clients a combination of prevention and assistance.

“What happens if your identity is exposed right now? What if somebody impersonates you on social media? What if your personal data is stolen? What will you do?” he said. “The answer is that most people don't have an answer.”

Surana said his firm is building a cyber assistance helpline.

“You will have a number that you can call and then a personal companion who will help you through that journey in terms of restoration of your identity and the recovery of your data,” he said.

Surana suggested that travel and cyber covers could be sold together.

“For example, if a broker is selling an annual travel product to an end customer, they might want to offer cyber as an additional service,” he said.

He said people are most exposed to cyber risk when they are travelling, for example using unsecured internet connections at airports and hotels.

“It's a logical fit alongside a travel product,” he said. “You will always be sitting behind a VPN [with his firm’s cyber offering] where your IP address will be masked and it will never be exposed to a cyber-criminal.”

Cyber protection gap widens for SMEs

A November report by the Actuaries Institute found that SMEs “risk being left behind in the fight against cyberattacks unless they receive more help to bolster their defences.”

The report: Cyber Protection Gap Widens for SMEs, found a growing gap between Australian corporates and the nation’s estimated three million SMEs in terms of preparedness to counter cyberattacks.

Among the causes of the gap: SMEs’ lack of understanding of cyber issues and the cost of covers.

“Given SMEs are the lifeblood of our economy, employing up to a third of our workforce, and cyber risks are always changing, they shouldn’t be dependent on luck to protect them from a cyberattack - they need to depend on knowledge, good cyber hygiene and robust cyber defences,” said Win-Li Toh, an author of the report and also the incoming Actuaries Institute’s president for 2025.

Toh said the Institute would like to see industry, insurance companies and governments work together to ensure SMEs “have practical, cost-efficient means to strengthen their cyber defences and ability to respond to cyberattacks.”

Are you an insurance industry stakeholder? What’s the answer to the SME cyber protection gap? Please tell us your thoughts below

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