The recent highly publicised string of cyber attacks on government and commercial sites is having a positive effect on the sale of cyber insurance.
Incidents such as the ransom attack on NHS files and the alleged Russian involvement in the US election and UK Brexit referendum has focused the attention of company directors. Firms are recognising the serious threat to their businesses that cyber attacks may pose.
As a consequence, the cyber insurance market is seeing massive growth and new products continue to come to the marketplace. Some see this as a boom time for cyber insurance professionals.
Even small to medium-size companies are dependent upon the internet and now crime is following them on-line, targeting these companies. Whilst it may be the major breaches of security in government departments and large multi-nationals which attract the headlines, smaller companies are increasingly in the criminals’ cross-hairs.
Away from the headlines, companies may also want to consider system failures and risks not related to cyber-crime which would also be covered by a good cyber insurance policy. Even more reason to anticipate a spike in the sale of cyber insurance policies.
The sale of these policies is the subject of some debate within the industry. Many cyber insurance professionals argue that the policies should be marketed as stand-alone products, rather than add-ons to more general policies.
They argue that such policies would be best under-written by experts who are better equipped to calculate risk. These professionals make the point that their counterparts involved in more general products do not have the expertise necessary to manage these products.
Industry professionals feel that although a cyber policy cannot prevent attacks, it does encourage the client to focus on the security aspects of their technology base. In the event of an attack, the policy should at the very least mitigate the damage and allow the company to be up and running as normal in the shortest period of time.
By working together with the client, cyber insurance companies will help them keep pace with the threats, and hopefully mitigate the number of cyber claims.
Another reason to anticipate growth within the cyber security insurance sector is the growth in regulation across Europe, which is catching up with US regulators. The British Government now has a dedicated section on the gov.uk website relating to cyber insurance, aiming to make Britain a world leader in the sector.
This is reflected in the Government’s National Cyber Security Strategy, as well as the General Data Protection Regulation introduced by the EU. These regulatory and policy moves will have the effect of increasing the demand for cyber insurance across a range of industries, which is good news for UK insurers.
The main reason for this is that the legislation places a responsibility on companies to report breaches in their data security and to deal with the problems efficiently and promptly. Cyber policies are designed to provide technical and financial support to companies under these circumstances.
The change in onus, placing more accountability on individual firms, means many will seek the added protection of a cyber policy.
Finally, the increased risk to individuals means that there could be another growth area, expanding home insurance to cover cyber security factors in the near future.
This article was written by Nick Hoadley, Managing Director, Insurance Search.
Why not book in for a free 15 minute call with us today? Please click here to make an appointment.