Cyber crime is an unwelcome reality for millions of people in the United Kingdom—one that is creating new opportunities for insurers and brokers, according to the Cyber Research 2018 survey conducted by Insurance Post and sponsored by CyberScout.
Nearly half of survey respondents—49 percent—have been hit with at least one data breach, according to the survey of insurance industry professionals and the general public about cyber. And 46 percent have experienced email hacking. The survey interviewed the general public, as well as commercial and personal lines brokers and insurers, including managing general agents, in the UK.
“Cyber crime is not a theoretical threat or a ‘panic story,’ ” said Lord Hunt of Wirral, chairman of the British Insurance Brokers’ Association. “Getting the terms of the policies just right will never be easy, but for both insurers and brokers, a new risk invariably creates a new opportunity.”
Indeed, as cyber threats impact both individuals and businesses, new opportunities are developing for insurers and brokers both in personal and commercial cyber cover. The challenge now is to ensure that cyber policies, which are still in their infancy, evolve to fit the needs of customers.
The survey revealed that 61 percent of business leaders across all industries see cyber attacks as a threat to growth. And 66 percent of small businesses have experienced cyber crime, according to the Federation of Small Businesses.
In response, commercial cyber policy purchases have steadily increased in the past year, with one-quarter of brokers reporting an increase of more than 50 percent in the number of policies sold. And cyber policy purchases are expected to accelerate in the next year.
Insurers and brokers surveyed ranked these as the top three industries most vulnerable to a cyber attack: healthcare (76 percent), financial institutions (71 percent), and small and medium enterprises (60 percent). Yet when it comes to purchasing cyber coverage, healthcare and SMEs were ranked fourth and third, respectively.
How to seize cyber opportunities
Companies must work to become more prepared for a cyber attack and better educated about cyber risks in general, according to survey respondents. Meanwhile insurers must find better ways to accurately predict risks to educate their customers.
Other challenges insurers and brokers said they face when it comes to cyber insurance: modeling trends to pricing policies, educating clients, raising awareness of risks among clients, and understanding cyber themselves and keeping up with cyber attack trends.
When will individual consumers in the UK become as concerned about cyber protection as UK companies?
Roughly 37 percent of the general public said they had been hacked and a third-party used their information for illicit purposes.
Many respondents—71 percent—said they were somewhat to very interested in buying an insurance policy that would reimburse them for lost funds. And 50 percent said they would prefer to buy cyber or online insurance from established insurance companies, according to the survey.
“What puzzles me is that this is still a class of cover that has to be sold,” said Howard Lickens, CEO of Clear Insurance Management. “Why are clients not beating down our doors to buy the coverage?”