As workplaces become less mechanized and more digitized, brokers can expect to see insurance products evolve accordingly – enter the world of “strategic products.”
“Our view with strategic products is that, as a specialty company, we need to find ways to add value and add coverages,” said John Mulvihill, president of The Boiler Inspection and Insurance Company of Canada (HSB BI&I). “So we look at things that are in some ways connected.”
For example, Canada has recently witnessed the introduction of a new insurance product, HSB BI&I's 'New All Systems Go Plus,' which combines coverage for equipment breakdown alongside coverage for compromised data and identity theft. The coverage has been designed with the small and mid-sized businesses in mind.
Such specialized insurance is a reflection of the modern workplace, which features a combination of mechanized equipment and electronic data exchange.
“Historically, we’ve moved from boilers and pressure vessels, from mechanical equipment, to data and other business exposures that tend to be more related to the electronic and data-related side of things,” said Mulvihill. “If you look at the equipment base that we insure, boilers and pressure vessels are still an important part. But we handle a lot of claims with electronics, electronic equipment and communications equipment. For us, it’s a natural progression.
“People obviously need buildings and physical infrastructure, but the investments and values what concerns their business tends to involve a lot of electronics and data and communications, so that’s why we’ve developed some of these products.”
Since businesses today increasingly depend on computer networks to store valuable consumer, employee and third-party data, companies are starting to look at adding endorsements and providing standalone coverages to cover cyber-risk exposures such as data and identity theft.
But in Canada, this is the first effort to combine equipment breakdown with data compromise and identity recovery coverage in a single policy. Small businesses are suited to the product, since they generally have less stringent controls in place to protect against data breach and identity theft.
“This is a really new concept – it’s a combination of both,” said Abdul R. Khan of RDA Inc. “We are insuring offices and real estate agents, engineers’ and architects’ offices, contractors, all of those kinds of risks. This kind of product will suit them.”
The Canadian Anti-Fraud Centre received identity fraud reports from 11,095 Canadian victims in 2009, totaling a loss of more than $10 million. This was an increase of $1 million over what was reported in 2008. Payment card fraud was the most commonly reported incident, and yet, many instances of identity theft and fraud go unreported.
Coverage for identity theft includes expenses related to straightening out issues related to lines of credit, bank accounts or stolen funds. Also, a third-party service offers advice on sorting out documents and contacting banks or credit cards.
