One major cyber challenge for insurers and brokers is how to encourage more small businesses to take out cyber cover. A well-known Insurance Council of Australa (ICA) statistic says that under 20% of SMEs have cyber insurance despite being the targets of about 40% of attacks.
Damien Gallagher (pictured above), CGU’s executive general manager, said the focus of this agency is SMEs.
“[Establishing] an agency is more about the specialization that’s required to really service this risk,” said Gallagher. “The agency that we’ve created is a way to support the smaller business customer.”
The firms that CGU has partnered with to form Cylo, he said, are a recognition of the three types of cyber risk that businesses need to deal with.
“The one that you transfer, the one that you get out in front of and the one that, when it happens, the customer is supported,” said Gallagher.
CGU, he said, provides the risk transfer with the insurance coverage. Cyber security firm and Cylo partner, UpGuard, is there to “get out in front” of the risk.
An IAG media release said this cyber security firm is providing cyber risk monitoring, “acting as an early warning indicator of vulnerabilities to minimise the potential of cyberattacks.”
The release said Cylo’s other partner, claims management firm Crawford & Company, is overseeing “24/7 incident response, cybersecurity intelligence and end-to-end claims management.”
Gallagher said there are seven dedicated employees in CGU’s Cylo team with support available across the firm.
“We manage the agency as a distinct part of our underwriting division: Intermediated insurance Australia (IIA),” he said. “The agency itself is its own business with its own employee group that are there to serve the brokers who introduce their customers to us.”
IB asked Gallagher what he sees as the biggest cyber challenge for brokers and their customers?
He suggested that the cyber challenge for brokers - and insurers - starts with their own need to manage sensitive personal data from customers.
Another challenge, he said, from his position running an intermediated division, is how to help brokers advise their SME customers about the cyber risk they are facing.
“Then importantly, that the small business owner is not on their own in how they deal with this risk, that there is a product that’s targeted to support them,” said Gallagher. “And so [the challenge is] getting that message out there to our brokers.”
He said that educating SME customers and identifying their cyberattack vulnerabilities is an important part of Cylo’s offering.
Some brokers have also upped their cyber skills with a view towards capturing the SME market.
In November, Adelaide-based broker Andrew Brett announced the launch of Infosure Insurance. He described the firm, started with three colleagues, as “a dedicated cyber insurance brokerage” and a “first of its kind” offering.
Brett said his point of difference - partly confirmed, he said, by feedback from insurers – is the ability to provide “all three pieces of the cyber landscape: IT solutions (MSPs), cyber auditing and cyber insurance.”
Brett recently discussed the Australian cyber insurance market and its challenges on Anthony Hess’s Cyber Insurance Leaders podcast.
He said, compared to one year ago, the local cyber market has changed completely, partly due to the government’s significant cyber and regulatory initiatives like the 2023-2030 Australian Cyber Security Strategy.
Brett said many more SMEs now have a “technical plan” for a cyberattack. However, his biggest challenge, he said, is “non-purchase.” He said more than eight out of 10 business owners don’t buy cyber insurance and many still don’t understand its “end to end value.”
See LinkedIn post here.
Other insurance industry stakeholders are upping their cyber resources.
International law firm Clyde & Co has appointed five new special counsels in Australia – three of them will focus on cyber breach response.
Stefanie Luhrs, partner at the firm’s cyber practice, said the new appointments are a response to both rising cyber threats and increasing claims risks.
What’s your insurance business doing about the cyber threat to both your business and customers? Please tell us below.
