The massive – and successful – cyber hacks of large retailers Home Depot and Target stores, and the headlines associated with them, are making cyber risk insurance sales easier than ever before.
“We’ve had a lot of help with larger cyber breaches, and the headlines that come with them,” says Ashley M. Hunter, broker/owner of HM Risk Group. “I think it is one of these things where the client says, ‘We’re not like Wal-Mart, I don’t have that many records.’ But now they see it is Target; now it is Home Depot; now it is UPS; now it is the small guy down the street. And we are letting them know that it could be $400,000 that it will cost you if you have a cyber breach – and nobody wants that.”
It is the accumulation of headlines that is fanning the flames for businesses to buy cyber coverage.
“This is a product we’ve been working the past two years, but we haven’t been actively promoting it until the last year,” Hunter told
Insurance Business. ”Our clientele would have said we don’t have any records that would be breached, so we don’t need it. Now, because everybody shops at Target, everyone has a Sony-something product, now they think, ‘whoa! Maybe my business is exposed.’”
Hunter points out that no business owner making $2 million wants a simple $100,000 policy.
The majority of Hunter’s clients are getting what she describes as the typical cyber coverage, “small to medium cyber breach coverages, first and third party coverages.”
And although most of the carriers have these policies available, that poses a problem for those looking for cyber coverage, she points out.
“Because there are a lot of new carriers in this space now, it is very difficult to see who will still be in this space in five to six years,” says Hunter, who is based out of Austin, Texas, with a location in Manama, Bahrain. “And the ones who have been in the space the longest tend to price themselves accurately – but that means when you compare it to a carrier that has just got into the space, they are pricing it competitively (lower).” (continued.)
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And that means having to explain to the client why a higher premium is really to their benefit.
“I give them both options, but I always explain both options rationally to the client,” says Hunter, “so they can make a rational decision. And with some of these policies, you can be talking a difference of 30 to 40 per cent as far as the premium is concerned.”
Hunter does say that they are all good companies, but that an explanation is needed for the customer as to why there is such a difference in price point.
“We’re very lucky in that we have astute insureds, but they are looking at the bottom line – and why am I spending 30 per cent more, and what am I actually getting? And a lot of times it comes down to claims,” says Hunter. “And a lot of these (insurer) newcomers to the space don’t have the expertise that a
Beazley or an
AIG have. They are more likely to pay for a loss, as they have a history of seeing these claims.”
