Cyber insurance is not just the domain of corporate giants facing the possibility of high-profile security incidents. In fact, it’s a cover you should be pitching to all of your clients, Manchester Underwriting Management (MUM) has urged brokers.
With the rise of technology and automation, almost every business today faces a range of cyber exposures. And while large-scale data breaches dominate headlines, small businesses are just as at-risk of an event as big corporates, the MGA has warned.
“There is an awful lot of press coverage around the big breaches that happen, and the smaller companies that are still suffering breaches don’t seem to be as newsworthy. It can be difficult for a small business to identify with the type of loss that’s being reported in the Press,” Cliff White, head of cyber insurance at MUM, told Insurance Business.
The challenge for brokers is to educate clients who may still feel that they don’t need cyber coverage. MUM has developed two new guidance documents which take a risk-focused approach rather than a technical one, helping brokers to position cyber in a way that any business – from a hair salon to a pub – can relate to.
Another common misconception among clients is that a cyber event will be picked up under an existing insurance policy, which is largely untrue.
“Cyber does sometime overlap with some of those other coverages, but none of them have the same full package set-up you can gain with a stand-alone cyber policy,” said White.
While cyber was once considered an add-on, in today’s sophisticated risk landscape that’s no longer sufficient, says Richard Webb, director at MUM.
“The cover under a cyber policy is very comprehensive. That’s because the exposure that a business faces is pretty complex,” he said. “Cyber doesn’t lend itself to being an add-on, because if you want coverage for things like business interruption, reputational harm and social engineering fraud, those aren’t things you just add on to a professional indemnity or liability policy.”
But today’s cyber insurance market can be tricky for brokers to navigate, thanks to the wide range of products available and a lack of standardised language.
“Traditionally in insurance, within a line of business a lot of the products end up becoming very similar and very familiar for brokers,” Webb commented. “But in cyber, there are a lot of different markets, each with its own product and wording. There is not a lot of crossover, and it means that brokers aren’t particularly familiar with all the different products that are out there.”
That means that as well as educating their clients on the risks, brokers often have to work on building their own knowledge of products and risks too.
Ultimately, cyber coverage should be relevant to almost every client on a broker’s books.
“Cyber enables a broker to cross-sell to all of their clients,” Webb said. “Unless there is a client that has no electronic activities whatsoever – and these days, it’s hard to imagine what that would look like – then every client a broker has is going to need a cyber policy.”
