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Cyber is one of the fastest growing segments of insurance in North America. It’s very much a buyer’s market, with ample capacity and competitive pricing despite multiple high-profile data breaches and cyberattacks in recent years.
There are ample opportunities for insurance brokers to thrive in the cyber insurance space, as long as they become “true students of the risk,” according to David Derigiotis, corporate vice president and director of professional liability at Burns & Wilcox.
“The cyber insurance market presents both an incredible opportunity for those involved but also great risks, especially for those who don’t have a strong enough understanding of the exposures associated with cyber business,” Derigiotis told Insurance Business. “Brokers need to be true students of the risk, and keep on top of cyber trends and how businesses are investing into and utilizing technology. As technology continues to play a greater role in business, organizations will gain incredible efficiencies, but they will also be exposed to new risks.
“I think it’s really important for brokers to truly vet and evaluate the wholesale broker or insurance carrier they’re partnering with to make sure they have the proper expertise. These partners need to be committed to the space and not just looking to jump in underprepared hoping to capture some of the market growth. One exclusion or one piece of missing wording can make all the difference at the point of claim.”
Burns & Wilcox has specific cyber products and programs available for clients of all sizes across Canada, from small businesses to Fortune 500 firms. Transferring cyber risk across the spectrum “requires expert knowledge and expertise,” Derigiotis explained. Small and medium-sized enterprises (SMEs) will likely have different cyber risk management and transfer needs than larger corporations who might already have a dedicated chief information security officer (CISO).
The SME segment is one of the fastest growing areas in the cyber insurance market, according to the Burns & Wilcox expert. The boom in start-up businesses and the gig economy across North America is driving “tremendous growth” among first-time cyber insurance buyers, as well as inciting others to increase their limits upon renewal, he said.
“At Burns & Wilcox, we write a lot of cyber business, we’re very deep into the segment and we have a lot of expertise,” Derigiotis commented. “Our major focus at the moment revolves around the value-added services we can offer with our policies. It’s not just about financial risk transfer; it’s about making a better risk and enabling a client to strengthen their cyber security posture. If we can offer value-added services on the front-end, it makes for a stronger insured, a happier broker and a better risk to write from an insurance carrier standpoint.
“We consider ourselves an extension of our client, which is the retail insurance agent and broker. We make sure we’re providing benchmarking information and appropriate risk mitigation and risk management services up-front so that our brokers can draft proper privacy policies and put strong incident response plans in place. We offer a wealth of resources up front so that our clients who are dealing directly with SMEs have access to everything they need.”
Organizations of all sizes are starting to wake up to the realities of cyber risk. This has been triggered partly by a number of high-profile breaches at companies like Facebook and Equifax. Even small businesses are starting to understand that they have vulnerability. For example, if an employee was hacked on their personal Facebook account and then accesses that account at work, they could inadvertently introduce that problem into the corporate network.
“It doesn’t matter how large a company is, or how big or small its security spend is – all companies are at risk and need to take the proper steps, no matter how basic they are, to cover their bases,” Derigiotis added.
