One insurance solution has the potential to become as commonplace for businesses as home and motor insurance is for individuals.
The insurance in question is cyber insurance – with Neill Johnstone, managing director at Lorega believing the need for the product is going to grow at a rapid pace.
“There will come a time when it becomes a standard part of insurance,” he said. “It will become something that people automatically select as part of their protection. The average profile for cyber criminals is early 20s and they are committing tens of thousands of crimes from their bed – they don’t even need to go out and burgle anyone these days. I can’t see cyber criminals having less activity so the need for insurance will only grow.”
Indeed he should know a thing or two about the cyber insurance area – with Lorega and cyber consultancy Agenci recently winning insurance product of the year at the Cyber Security Awards. Yet according to Lorega’s own statistics many businesses are still overlooking the cover despite the fact that 25 per cent of SMEs won’t recover from a data security breach. As such, he believes it’s up to brokers to be proactive in educating their customers.
“There are brokers who are agents of the insured and it’s their responsibility to outline to them the risks that their businesses have,” he said. “So a lot of the work has to be done by brokers. Of course there are also insurers, especially those with a direct model – and some of the responsibility will also fall on them.
“Then there are intermediaries like us who are hoping to have success with our products – it’s up to us to help out with education too. Our cyber partner Agenci, their CEO is even getting into schools and spreading the message to eight-, nine-, 10-year-olds about cyber risk. They are taking the approach of ‘let’s start with the next generation’.”
Lorega’s product, Cyber Recovery, is designed to help SMEs survive a data breach following a cyber attack – but not in the conventional manner that you might expect from an insurance policy.
“We don’t provide liability and we don’t provide business interruption cover – so our cover is a lot narrower than most,” continued Johnstone. “Instead we’re simply providing expert assistance when you have a cyber attack or a loss of data. So if you’re an SME you probably haven’t got a large technical team sitting around and waiting for complex IT issues to arrive. You’ve probably got some IT and some external support of some form – but that’s probably not related to cyber security.
“So you have straightforward solutions to day-to-day problems but you don’t necessarily have solutions for these bigger issues. With our cover, if you have a cyber attack or data breach we will send you the expert who will deal with the problem. Our idea is to get you up and running again. Our premiums reflect this by starting at £75-£100 whereas others are maybe starting closer to £500.”
However, regardless of whether brokers choose to do business with this entry-level product or not, Johnstone believes that being involved in the cyber conversation has become almost essential for brokers going forward.
“I don’t think you’ll find many brokers who aren’t either already in the market or considering entering it,” he said. “I was at BIBA in May and we formally launched our products there. It was a hot potato topic. Everyone wants to talk about it. We don’t have any of our brokers that aren’t talking about it – this is not a conversation that can pass you by.”
Related Links:
Lorega forms partnership as one in three suffers cyber attacks
