It’s little wonder that cyber insurance is the fasting growing type of coverage. Not only are cyberattacks and breaches occurring with alarming regularity, the nature of cyber threats are also changing. Whereas a few years ago the main targets were corporate giants, banks and healthcare organizations, now small organizations and individuals are just as likely to be hit by a cyberattack that targets their data, affects their IT systems or steals funds.
In response, surplus lines insurance companies are getting innovative in order to help agents protect their clients. A shining example of the innovation on display is NAS Insurance, which recently launched cyber as an add-on to homeowners’ policies.
Cyber as part of a homeowners’ policy provides protection against a broad range of scenarios and risks, including email phishing scams on personal email addresses.
Picture the scene: the homeowner receives an email pertaining to be one from one of their legitimate service providers, say Verizon, asking for credit card or bank details to pay an upcoming bill. These emails tend to be extremely credible and, in many cases, individuals voluntarily hand over their banking information to a cyber criminal. Fortunately, if funds are siphoned from the account, the homeowners’ policy with cyber will reimburse any stolen money.
“Whereas last year ransomware was all the rage, in 2018 we expect to see an uptick in financial fraud claims… email scams that fool individuals into giving their bank or credit card information to imposters and wire transfer scams that lure companies into sending funds to criminals,” says Jeremy Barnett, senior vice president of marketing at NAS Insurance Services. “I also expect a lot of personal cyber issues to arise this tax season as a result of the Equifax breach last year.”
Another example illustrating the value of cyber in a homeowners’ policy is related to something less obviously financial: cyber bullying.
“If a family member, say one of the children, is a victim of cyber bullying or abuse by someone at school it can cause a lot of stress and anxiety,” Barnett says. “The person involved may need therapeutic counselling or to transfer school, all things with potentially considerable costs that the policy will reimburse for.”
Traditional insurance companies are increasingly looking to reinsurance brokers – companies like Guy Carpenter, Willis Towers Watson, Aon Benfield, and Holborn – to bring them strategic advice and partners as well as financing arrangements with London. Those reinsurance brokers also reach out to surplus lines firms like NAS on behalf of those insurance companies. In many cases, the surplus lines company will provide cyber expertise, private label the product, and also provide support for it.
