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It’s a good time to be in the cyber insurance space in Canada.
Market capacity is increasing, and new insurers are entering the playing field with their own cyber products almost every month, which is great news for the consumer.
In Canada, there are generally two types of cyber insurers: those who take on highly complex risks, who are often linked to the Lloyd’s market, and those who offer cyber endorsements or policy riders usually bundled with small commercial policies, for lower level risks.
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Insurance Business spoke to Ivan Au, manager of technology, cyber & professional liability at The Sovereign General Insurance Company about “unique opportunities” in the Canadian cyber insurance market and the importance of education and knowledge transfer.
“Capacity in the Canadian cyber insurance market is really starting to grow,” said Au. “There are some select insurers writing really complex risks and lots of others offering lower risk, more commoditized solutions. I believe the key differentiator is underwriting expertise. The markets that have really invested in cyber, like Sovereign, have the expertise to write complex risk.
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“The products on the market can be a bit of a mixed bag. It’s often only the more complex cases where you see the bespoke, tailormade cyber insurance offering, complete with value-added breach services.”
Underwriting expertise helps insurers educate broker partners, who can in turn better educate clients, according to Au. This knowledge transfer is driving Canadian uptake in cyber insurance.
“It’s all about effective knowledge transfer,” Au told Insurance Business. “The broker has to understand what cyber is and transfer that knowledge over to the insured. Selling coverage to clients who don’t believe or understand they have cyber exposure – which accounts for the vast majority of Canadian businesses – is challenging.
“It’s also worth remembering that brokers often have to sell 10-15 different products. Maybe insurance companies are churning out products that are outpacing how fast brokers can learn them. Education is key. At Sovereign General, we take our time to properly train our broker force so that they truly understand the cyber product.”
Cyber insurance is great for consumers because “they’re getting more than they’ve ever had” from an insurance policy, said Au. Traditional P&C products offer little more than risk transfer and standard services, but cyber generally comes with pre- and post-breach value-added services, such as education tools, anti-phishing campaigns, apps, breach coaches and 24/7 response teams. Sovereign General has partnered with CyberScout (previously known as IDT911) since 2012 to offer both proactive and reactive cyber services to clients.
“From a cyber perspective, being proactive and providing knowledge is one of the best things you can do for an insured,” Au added. “There’s a lot of doom and gloom in the news about cyberattacks but there’s always light at the end of the tunnel. There are unique business opportunities to capitalise on in the Canadian cyber insurance market.”
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