Cyber insurance today is a lot like directors and officers liability insurance (D&O) was 15 years ago, according to Matthew Davies, vice president, media and cyber liability product manager at
Chubb Canada.
“People didn’t really think they needed D&O – but today it would be very unusual for an organisation with a board of directors not to purchase D&O insurance. Over time, I think cyber insurance will also become less of a discretionary buy and more of a standard purchase,” Davies told Insurance Business.
Ransomware, software viruses and data breaches are hot topics in global news. On Tuesday (June 27) a virus disrupted IT systems worldwide, which included a ransom to be paid in the digital currency Bitcoin.
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As cyber threats continue to develop in complexity and diversity, brokers must work hard to educate businesses about the advantages of having a cyber policy, according to Davies.
“Cyber is very topical at the moment,” said Davies. “A lot of business owners and boards of directors are asking their insurance brokers about cyber coverage. The insurance broker has a critical role in explaining to their customer how to mitigate cyber risk.
“Brokers also need to educate clients about the difference between adding a cyber endorsement onto an existing insurance policy - like a professional liability or a D&O policy - versus buying a fulsome stand-alone cyber offer.”
Cyber liability insurance fills the gaps that exist in traditional policies. It protects against intangible breaches and gives organisations “a robust way to respond to a cyber event”.
A comprehensive cyber policy will give businesses financial cover for first party expenses, such as the cost of the investigation, the cost of notifying affected parties and the cost of the clean-up.
“The whole idea behind first party coverage is largely to mitigate the potential for liability damages because you will be able to help those who have been affected by the event,” said Davies.
“There are lots of other features in a cyber policy. It can help organizations respond to ransomware and extortion threats. Ransomware is quite common these days and it can affect any size of business. A cyber policy would help to cover the costs of a ransom demand, as well as deal with instances of corrupt or destroyed data.”
Uptake in cyber insurance policies has been growing in Canada. Davies said this is due to the hard work of brokers and a rise in the number of contracts containing a cyber insurance requirement.
But there is still more to do to “promote the value of cyber coverage” and turn it from a “discretionary buy” into “more of a standard purchase”.
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