With standalone cyber insurance now a $1bn market, there’s no question that cyber liability insurance is the next big growth opportunity for producers. However, those already in the game say it requires constant diligence and a tech-savvy mind to prosper—something many cyber insurance producers don’t have.
Cyber liability policies are notoriously difficult to understand and most producers are leading clients into danger by being badly informed, said Jake Kouns, chief information security officer with Risk Based Security.
“There are a lot of options out there and most brokers aren’t putting in the time to learn. They’re lazy in presenting policies to insureds, and insureds don’t see any differences so they go for the cheapest one,” said Kouns. “Unfortunately, comparing cyber liability policies is like comparing apples to kiwis, or comparing apples to some fruit no one has ever heard of. In the end, certain triggers and exclusions mean the coverage isn’t there when it’s needed.”
According to Christine Marciano, president of specialized brokerage firm Cyber Data Risk Managers, continual attention to the constantly-changing landscape of cyber risk is the only way to avoid such disasters.
“Read the hard copies and industry white papers to make sure you know the current cyber risks. Stay up on Google alerts and daily news,” she said. “Put in your due diligence first, and then you can have that conversation with your client.”
In the meantime, Kouns has a few tips for producers attempting to navigate general cyber insurance policies.
Producers should never recommend policies that have a provision for “reasonable security in place,” for example, because the nature of cyber liability means the definition of “reasonable security” is always changing.
“You can do everything you need to do for that moment in the ever-changing landscape of security and still have a breach,” Kouns said. “There are so many ways to go after someone, and it’s so easy to make the case that the client didn’t have reasonable security in place.”
Producers should also keep a sharp eye out for broadly-phrased virus and wireless exclusions, as well as paid card industry (PCI) exclusions if the client collects customer credit card information.
While it’s definitely a tricky field, producers who can manage to wrap their head around cyber space will have a huge competitive advantage over captive agents working with general information.
“Someone that has a firm grasp on all the available information can offer a lot more to a client than the local State Farm Insurance agent,” Marciano said. “There might be some gaps in coverage the agent didn’t even know about because they didn’t take the time to learn it.”