The news that 80 million Anthem policyholders had their data compromised hit the corporate and regulatory world hard this month, fueling the creation of a new agency to monitor cyberattack threats and the doubling down on security at several major firms.
And while many industry leaders acknowledge that it is now a matter of when firms are hacked, not if, independent insurance agents report that cyber liability insurance is still a difficult sell.
John Tiene, who represents thousands of agents in the Northeastern U.S. as CEO of
Agency Network Exchange (ANE), says small businesses are especially reluctant to purchase this important policy.
“The demand (for cyber) is increasing, but not at a rate we think is quick enough,” Tiene told
Insurance Business. “Small businesses are still very reluctant to sign up for the coverage and that really concerns us because some 30 per cent of breaches occur in these small companies with fewer than 250 employees.”
The reason is not pricing, which is currently experiencing downward pressure for low-risk classes thanks to the entry of several new carriers into the market. It is education.
Because small businesses do not recognize their own exposure, many feel cyber insurance is a superfluous purchase. That should represent a clear call to agents, says Tiene.
“Our job is really to educate the business owner as to the variety of exposures they are presented with and help them understand how the coverage can protect them,” he said. (continued.)
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Carriers with superior products help in this effort by offering education to both agents and business owners alongside their policies. Tiene says it is currently the larger carriers that offer these services, along with more sophisticated products that can be specialized for larger clients.
Most importantly, however, is ensuring agents are comfortable enough with the cyber product to discuss it with clients. Going forward, failing to discuss cyber protection could be a major E&O exposure for independents.
“This should now be a standard conversation with clients because every client has the exposure at some level. A breach may only cost a client $10,000 to $30,000, but for a small business client, that is a lot of money,” says Tiene. “They may turn to the agent and say, ‘Why didn’t you talk to me about this?’
“This is a coverage need of the 21st century.”
