CFC Underwriting, a global agency with a focus on cyber insurance, recently wrapped its cyber roadshows in Australia. One aim of the Sydney and Melbourne events was to help brokers respond to the current cyber challenges facing SME clients. The Q&A sessions also offered insights into the top cyber concerns of local brokers.
“One thing that was fairly evident was a bit of concern right now about the state of the market,” said Philippa Davis (pictured), the firm’s international cyber team leader who conducted the roadshows.
Brokers were uneasy, she said, about the current “hyper-competitive” cyber market and the possibility of it suddenly hardening and bringing implications for their clients’ cyber coverages.
One of her tasks during the roadshows, she said, was to demonstrate that CFC is a good broker partner in this situation. The firm, said Davis, has clocked up 25 years in Australia and has wide ranging cyber claims experience and expertise.
However, she said her firm, and everyone at the roadshows, acknowledged that recent years of increasing cyberattacks coupled to low coverage take-up among SMEs was driving a “reputational issue” with clients.
Davis said CFC’s data showing its high cyber claims acceptance rate of 99.1% is something brokers can use to counter the reputational concern.
“We're showing that to help our broker partners win their clients’ trust and get over that reputational concern about cyber insurance and how it doesn't respond when it actually does,” she said.
She said brokers also asked lots of questions about her firm’s response app that comes with their cyber coverage offerings. This app sends out alerts about possible threats.
“Last year, we sent over 12,000 threat alerts to our clients [globally] and only had 3,000 inbound claims which is a good story for them [brokers] to share, to show that cyber insurance is obviously working,” said Davis. “They [brokers’ clients] don't need to have a claim in order to get value out of the policy.”
Davis said concerns about how policies are responding to the threat of artificial intelligence (AI) wasn’t explicitly raised by brokers during the roadshows. However, she said broker feedback on AI, together with information from their claims, has informed their new cyber offering.
“That's something that we did put into this new wording in terms of giving that affirmative comfort and clarity about attacks utilizing artificial intelligence,” said Davis. “Obviously phishing is a common way that threat actors utilise AI to making these attacks really sophisticated.”
However, she said the cyber industry is also deploying AI to help improve its security.
Davis also offered insights into the types of cyberattacks that dominate claims in Australia.
“One thing we have noticed in Australia from our claims data is that ransomware attacks are more costly for Australian businesses,” she said.
Davis said, in the last 12 months, 89% of her firm’s claims costs in Australia were a result of ransomware attacks compared to 71% globally and 65% in the US.
She said one reason is the relatively high proportion of SMEs in the local economy.
“They're suffering from being downstream victims of larger supply chain attacks and tend to have weaker security, sometimes because of budgetary constraints,” said Davis. “There is still that lack of belief that they're going to be a target.”
When Australian SMEs are attacked, she said they are often not very well prepared. CFC estimates that only between 10% and 20% carry cyber insurance. In recent years, said Davis, the figure hasn’t moved much.
“That education gap is still definitely, I would say, the biggest challenge for us as an industry,” she said.
CFC is trying to address that, including through a recently launched, free cyber masterclass program for brokers that has CPT accreditation.
Despite the challenges, Davis was upbeat about the opportunities for cyber brokers.
“The market is hyper competitive right now but one thing we've been saying is this is the best time for clients to be buying cyber insurance because I don't think we've ever seen it before where [cyber insurance] is so accessible, innovative and clients have got more optionality than they've ever had before,” she said.
What are your challenges in the current cyber insurance market? Please tell us below
