The General Data Protection Regulation (GDPR) could prove a useful tool for brokers in helping demonstrate to clients the wide nature of cyber exposures facing businesses today, according to Manchester Underwriting Management (MUM).
Data is a hot topic in 2018, thanks in part to the GDPR as well as events such as the Facebook-Cambridge Analytica data scandal and numerous high-profile breaches. But while the GDPR may have proved a compliance challenge for businesses, it has also sharpened the focus on data protection.
“One benefit is that GDPR has heightened the awareness of the fact that people hold so much data now,” Richard Webb, director at MUM, told Insurance Business.
“For a lot of brokers, right now is a good time to get their clients’ interest in this subject, because they are currently working out how to deal with GDPR and, actually, a cyber policy will help them to tick a number of those boxes quite swiftly,” he said.
But while brokers can catch their clients’ eye with GDPR, they need to ensure that they build up a full picture of the spectrum of cyber exposures facing businesses today.
“Most clients, when you talk about cyber, will immediately focus on the crime aspect and things like social engineering fraud or ransomware type events,” said Cliff White, head of cyber insurance at MUM.
“Cyber tends to be considered as a cybercrime exposure, but it goes well beyond that – from breach response to business interruption,” he explained.
MUM has developed two new guidance documents which outline the range of cyber risks affecting businesses today – many of which fall outside the traditional notion of cybercrime and hacking.
From breaches of privacy and electronic communications regulations – relating to automated marketing calls, emails and texts – to the disruption of outsourced services or the threat of a malicious insider, there are a number of exposures that many businesses may be unaware of.
For some clients, the perceived cost of cyber insurance may also be holding them back from looking at taking out cover. But White stressed that the benefits far outweigh the costs.
“I think there is a perception that cyber insurance is expensive,” he said. “But at the moment, it’s a pretty soft market, there’s lot of capacity out there, and the variety of coverage is quite broad across the different insurers.”
He added: “Cyber is part of any business’s risk management, and it is not an expensive coverage relative to the risks that are being faced. I think once the broker has made the risk relatable to the client, they can understand the cost-benefit of the cyber coverage.”
