“There is still a great deal of apathy when it comes to cyber risks.”
Those were the words of NZI manager for underwriting liability and cyber Andy Beven (pictured) when he spoke with Insurance Business about the current trends, opportunities, and challenges in the intermediated cyber insurance space.
The apathy issue was one of two challenges that immediately sprung to Beven’s mind when asked about the difficulties being faced by the market.
“Most businesses, especially SMEs, simply don’t believe it will happen to them,” Beven said. “However, our experience shows that SMEs are just as likely to be impacted by a cyber incident as is a larger, corporate entity.
“In reality, the SME is unlikely to have the defences available to them to secure their systems, which can make them an easier target for cybercriminals. Fortunately, for any customer with NZI, as well as great insurance coverage, they also gain access to our partners at UpGuard who provide 24/7 monitoring of cyber risks and vulnerabilities for our policyholders.”
The other challenge, according to Beven, relates to companies’ spending power or lack thereof.
He said: “There is huge financial pressure on businesses in the current climate, and – unfortunately for some – cyber insurance still feels like a ‘luxury’ purchase for many SMEs and, therefore, one of the first to be cut if they are trying to save money on their insurance spend.
“Sadly, the reality is that they are more likely to be impacted by a cyber event than many other perils or incidents that more traditional policies cover.”
One silver lining, perhaps, is the learning that comes with these cyber events.
“As the cyber market continues to mature, we have more and more claims history, which we can use to refine rating models and further develop our cover,” the underwriting leader told Insurance Business.
“Having had a product in the market for nearly eight years, NZI has a wealth of claims data that we can use to help educate brokers and customers alike on the types of businesses that are being affected, and also the types of cyberattacks that our customers experience.
“There is also a growing awareness of cybersecurity and hygiene, especially from high-profile incidents which have affected government departments and financial institutions, leading to more businesses appreciating the value of cyber insurance.”
The growing awareness helps in narrowing the apathy end of the client education spectrum. At NZI, according to Beven, there has always been a focus on knowledge and expertise sharing when it comes to cyber risk.
“We find that most clients (or potential customers and brokers) are very keen to hear about the risks, solutions, and especially the war stories relating to cyber,” Beven said. “Just in the last year, we have delivered nearly 20 training seminars to brokers and clients. The challenge is to keep the content valuable and relevant, but as the cyber landscape is always changing, there is always a new angle to look at.
“We’re definitely seeing a better understanding and more proactive engagement with both clients and insurers. Many brokers now have a dedicated cyber resource, enabling them to engage with clients on a more technical level, and also provide excellent risk management advice on where a client’s vulnerabilities may lie and how best to tackle them.
“As we have found, time and time again, education is the key when it comes to understanding and promoting cyber insurance.”
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