Dramatic headlines detailing data breaches and companies being hacked by criminals show little sign of going away, but despite these high-profile incidents, there is still some way to go before businesses truly come to terms with the cyber liability exposures they face.
Recent years have seen some of the largest companies in the world become increasingly attuned to the risks they face from cyber criminals or employees unwittingly (or knowingly) releasing data.
But gaps remain, and those holes in cyber risk management only seem to grow wider the more you move down the corporate food chain.
This issue, and many others, were discussed during a recent roundtable The Insurance Insider hosted in Toronto, Canada in partnership with Munich Re Syndicates.
While many companies do now understand they have an exposure to potential cyber losses, they do not necessarily understand the scale or magnitude of what those losses could be.
Indeed, few truly comprehend that what at first appears to be a fairly minor issue can in fact have a long-lasting, or devastating, impact on their ability to exist as a business.
And this, argued various members of the panel, can help drive the cyber insurance market’s penetration in some of the more traditionally closed-off sectors such as the small-to-medium enterprise (SME) space.
But the hurdle, as has long been the case, is getting the message across to SMEs that the exposure they face is very real and that their business is very much at threat.
Sure, many SMEs may not store hundreds of thousands of people’s private information, but they can find themselves locked out of data systems due to ransomware.
Some have speculated that the introduction of regulation such as GDPR in Europe or the NYDFS Cybersecurity Regulation in New York State would help spur the take-up of insurance products among SMEs. However, as the panellists noted, that has not necessarily been the case.
A rush into the market from all manner of insurance carriers means the sector is flooded with capacity. Consequently, there is a lot of competition, and rates for coverage are low. And this is in spite of the fact that there have been some major headline losses hitting the market.
Loss-impacted accounts will face price increases, but for the most part, the rapid growth of the market means that for those insureds that have not faced claims, the cost of coverage continues to reduce.
But cheap coverage does not necessarily mean it is good for the insured. An ill-informed buyer may just buy the cheapest product on the shelf without realising the vast number of exclusions within the policy.
When it comes to making a claim on the policy, the insurance may not pay out, and that ultimately does not help the growth of the market either.
Read on to learn more!
To view the Toronto Cyber Roundtable supplement, please click here.