Brokers could benefit from rising tide of cyber crime by Sian Barton
Recent high profile hacks and data breaches remind businesses of the need for cyber insurance
Cyber has been a buzzword in the insurance sector for a while. The recent hack of telecommunications business Talk Talk has only increased awareness in the insurance community and wider business market.
For brokers, a highly publicised event such as this serves to reinforce the need to know about relevant products and the importance of advising commercial clients on them effectively.
Glyn Thoms heads up the cyber team for Willis in London. He believes there is currently a lot of “scope for brokers to grow” in the cyber market as businesses are now reaching a point where they “can’t ignore cyber risk”. He advised that recent hacks and data breaches “only served to highlight that this is a risk” and pointed out that in the last 24 months “momentum has been building”.
Specialist cyber broker, Jack Elliott-Frey of Safeonline agreed: “There is a definite pick up in terms of interest and companies purchasing cyber. So the tipping point from that perspective is already happening.”
Leading the way
Work is being carried out to turn the UK into a cyber hub. Most recently the government invested £860m the National Cyber Security Programme and the Cyber Growth Partnership to promote the UK industry.
In March the government also teamed up with Marsh to put together a report on cyber insurance as part of the government’s drive to make the UK a world centre for cyber insurance.
Speaking in March, Francis Maude, the then minister for the cabinet office and paymaster general, said: “The UK’s insurance market is world renowned and we want it to be the same in relation to cyber risks.”
Despite this there remains lack of clarity around cyber insurance. Elliott-Frey detailed: “There is a greater lack of understanding as to what cyber insurance can cover; it is not just cover for being ‘hacked’. It can cover computer system failure and business interruption, which could occur from all manner of events; so there is still opportunity here for brokers to educate their clients on this fact.”
NIG supported this view. Steve Scott, director of broker markets, commented: “As cyber risks change and develop, it is essential that brokers understand what these are, how they impact SMEs and what insurance products are available to meet the needs of their potential/existing clients. Our broker partners have requested support from us in this area.”
Tim Smith, partner and head of TMT at insurance risk law specialists BLM, pointed out that some business sectors were more mindful of the need for cyber cover than others. He singled out retail as the best performer and said professional services and SMEs were behind.
Happily, this growing knowledge and snowballing demand means there are plenty of opportunities for brokers to grow. “It is seen as a growth area,” explained Thoms. “It is an area of focus for us [Willis]. We’re making sure we have the knowledge to advise clients on what is available.”
Risk management is another area where brokers can win business. Scott argued that educating SMEs about cyber risk is somewhere brokers can stand out in terms of risk management.
“Managing against cyber risks will be a new area to an SME’s risk management plan,” he said. “For example, SMEs will be less familiar with how to protect themselves from a data breach than they are with their responsibilities under health and safety legislation.
“Brokers could therefore use education in the form of risk management as a way of creating an opportunity to speak to new customers and reinforce the value they provide to existing customers.”
And finally, there is plenty of scope to work with new clients. QBE’s Daniel Fletcher, cyber underwriter, advised brokers to work with cyber experts to gain clients describing the opportunities as “massive” and “there for the taking”.
According to Fletcher, professionals in the area of cyber security have been around for many years and will continue to grow in number. “I’m talking about cyber security essentials specialists, penetration testers, privacy training companies, ethical hacking firms and the like,” he listed.
“Brokers should partner with those firms and offer insurance to complement those services,” he concluded.