During a recent discussion with Insurance Business’s podcast series IB Talk, Chris McMurray, managing director of cyber at Travelers Europe highlighted some of the key ways in which the cyber security landscape has changed over the past few years. Among the subjects tackled, he revealed the main threats and targets in the UK landscape and what’s holding back businesses from embracing cyber insurance.
It’s the latter question that’s of special relevance to brokers who are on the front lines of their customers’ insurance purchasing habits and McMurray noted that it’s a multi-layer consideration. The cyber market over the last two or three years was in a hard market cycle, he said, which meant there was reduced capacity in the market and the cost of what was available was high.
“And the coverage itself was more restricted than it would be in a more regular or a soft market cycle,” he said. “The good news from an insured’s perspective right now is the market conditions have changed and there’s definitely more capacity in the market than probably there’s ever been. That’s resulted in prices coming down and, at the same time, coverage has advanced along with it.
“I think on top of this, while there’s still a lack of understanding of the threats businesses face, I think this has continued to reduce a little bit [though] there’s still work to do. I look at the SME segment in particular and I think there’s potentially still a false perception that cyber risk only applies to large businesses. And that’s because that’s what they see in the Press.”
There’s a broader education piece around cyber that the wider market has to embrace, he said. But it’s also important to look at the wider economic environment. Cyber doesn’t exist in a silo and with global economies going through some choppy waters, businesses of various sectors are feeling the pinch at the moment – and the thought of having to add another insurance product to their existing portfolio is likely going to sting.
However, he added: “I think the flip side of that, though, is should they suffer a cyber breach, the cost of that to the business is likely to be far higher than any potential cyber insurance premium that they may pay.”
