The growing volume of attacks threatening businesses and government entities of all sizes is a serious concern. The 2022 Annual Threat Assessment Report from the Office of the Director of National Intelligence provides insights. It reports cybercriminals are growing in numbers, scale, and the complexity of their ransomware attacks. Their actions fuel a virtual criminal ecosystem that threatens critical infrastructure services worldwide.
Threats Are Evolving Beyond Data Breaches and Ransomware Attacks.
Attackers are innovating their targeting strategies to focus on victims whose business operations lack resilience or whose consumer base cannot sustain service disruptions, driving ransomware payouts up. Many major transnational cybercrime groups have diversified business models that engage in direct wire-transfer fraud from victims in addition to or instead of ransomware. Business-e-mail compromise, identity theft, spoofing, and extortion schemes are among the costliest cybercriminal schemes.
Challenges to Marketing Cyber Liability Insurance
Despite the ongoing news about the advances of cyber scammers, cyber liability insurance sales face many obstacles.
- Cyber liability insurance costs remain high relative to traditional property/casualty insurance, while there is no standardization of cyber liability policies.
- There are holes in coverage for risks such as those arising from cloud computing solutions stemming from third-party providers,
- The industry does not have efficient means to communicate cyber liability insurance's benefits.
- Carriers struggle with pricing cyber liability insurance because losses are difficult to predict in occurrence and scope, and they lack the resources to manage claims.
- Cyber liability insurance is an odd fit into the typical underwriting process most insurers employ.
Helping Buyers Overcome Pre-Cognitive Dissonance
Even sophisticated potential cyber liability clients have reservations about the efficacy of buying the coverage. They mistakenly believe their existing IT infrastructure is good enough to prevent attacks. They also have concerns about the cost of cyber liability insurance, thinking it will be prohibitively expensive. Often clients only decide to buy cyber liability insurance after they experience a breach with the damage already done. And some use wishful thinking to hope cyber criminals will not find their business an inviting target.
An insurance agent's responsibilities include educating clients to overcome their concerns by informing them how cyber liability insurance works and why it is crucial to purchase it. In addition, they can explain how cyber liability insurance strengthens their overall risk management strategy.
Positioning Cyber Liability's Value Proposition
Agents can also help clients understand the value proposition of cyber liability insurance. Even if clients have purchased other types of insurance, they nearly always benefit from the protection cyber liability insurance presents. For example, they can clarify how cyber liability insurance more robustly covers data loss that might be included in other forms of insurance. And they can explain that cyber insurance also protects against the cost of restoring systems and recovering lost data. Finally, and quite notably in some cases, cyber liability insurance helps companies avoid the stigma of being labeled a "data breach" or "cyberattack" victim.
Properly Assessing the Risk Is Essential
An agent can identify gaps in a client's current coverage. For example, operations with multiple lines of business may need to purchase separate cyber liability policies for each line of business. Therefore, it's imperative to assist clients in evaluating their need for additional cyber liability protection beyond their current policies.
Clients Need Support to Comprehend How Cyber Liability Works
Agents can provide guidance on cyber liability insurance, including explaining the contrast between cyber and commercial general liability coverages and how cyber liability insurance protects businesses uniquely. They can also specify how cyber liability insurance provides broader protection than traditional commercial liability insurance.
Cyber liability insurance typically includes coverage for both third-party claims and direct losses. It typically covers claims from customers whose credit cards were stolen by thieves and legal defense costs incurred during the litigation. Additionally, agents must help clients know that cyber liability insurance is structured with some policies that offer broad coverage for losses while others are limited.
IT Professionals and Insurance Agents Should Work Together to Promote and Utilize Cyber Liability Insurance
Insurance agents should work closely with IT professionals to promote and utilize cyber liability insurance. Doing this will ensure that clients receive the best possible service and advice when purchasing cyber liability insurance. Some ways IT professionals and agents can collaborate include:
- Help insureds to gain a better familiarity with new and ongoing threats and how to evaluate whether certain types of coverage are necessary to protect against them.
- Identifying gaps in existing coverage with recommendations for an appropriate solution.
- Working together to inform clients about the necessity and benefits of comprehensive cyber liability insurance.
Cyber Risks Spread Over a Wide Range of Coverages
A typical cyber liability insurance program includes these types of policies:
- Business Interruption Coverage
- Data Breach/Loss or Theft Coverage
- Errors & Omissions (E&O) Policy
- General Liability Policy
- Identity Fraud Protection
- Professional Indemnity Insurance
- Property Damage
- Special Excess Liability Coverage
- Umbrella Policies
Cyber insurance coverage is expanding to cover many different types of threats. For example, insurers used to offer cyber insurance covering only data breaches, identity theft, and malware. However, as the cybercrime threat grows and the product gains market share and acceptance, cyber insurance extends to cover more perils such as viruses, denial of service attacks, and extortion.
The combination of cloud computing and the popularity of mobile devices as they become more powerful and popular also drives the growth of cyber threats. As networked technologies expand into nearly every aspect of our lives, hackers and malicious actors get more sophisticated, finding more devious methods to launch their attacks. These tech marvel products and services empower users with new, productive tools while creating fresh opportunities for cyberattacks.
Insurers Expand Cyber Risk Coverage
In addition to writing Data Breach Coverage (also known as computer crime), insurers now offer policies and endorsements to cover:
- Identity Theft
- Malware
- Malicious Software
- Remote Access
- Denial of Service
- Extortion Fraud
Cyber Liability Insurance Programs Can Include Other Types of Covered Losses, including:
- Loss of Business Income
- Reputational Damage
- Legal Fees
- Fines and Settlement Costs Due to Legal Action After Cybercrime Events.
Best Cyber Liability Insurance Programs
At ProgramBusiness.com, we seek to aid independent insurance agents who need to find and gain access to the markets for hard-to-place, unusual risks in the Excess & Surplus Lines and program business space.
A search for "cyber liability" on the Program Business Market Directory quickly returns a listing for PL Risk Advisors. It is a wholesale insurance resource for retail agents to wish to provide professional organizations with specialized professional and management liability insurance solutions.
PLRisk Advisors' Privacy & Network Security coverage is the solution to helping your customers manage and protect against risk. The program offers comprehensive coverage to all businesses, including those with hard-to-place risks, and it provides tailored policies depending on the client and the industries they serve. PL Risk Advisors also offers third-party liability coverage and first-party liability insurance.