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Brokers need more support from insurers to help them crack the cyber market.
New research from Ecclesiastical Insurance has revealed that while 78%¹ of brokers agree that cyber is an area of growth for their business, nearly two-fifths (38%) have never sold a cyber policy.
Just over three-quarters of brokers said that they understood what cyber insurance covers, however, 64% of the same sample admitted they needed more training and a quarter (27%) said that they would not feel confident in selling a cyber policy. Over half (54%) of brokers said that they would welcome more support from insurers to help them sell more cyber products.
According to the Cyber Security Breaches Survey 2019² produced by the Department for Media, Culture and Sport (DCMS), 32% of UK businesses identified cyber breaches or attacks in the 12 months prior to the survey. This figure increased to around 60% among medium to large businesses.
Yet when asked what the biggest barriers to selling cyber cover were, 90% of brokers said that clients do not believe that they need the cover. Other barriers included clients not understanding what cyber insurance covers, a belief that cover is too expensive and a lack of standardised policy wording.
However, brokers have an appetite to offer cyber insurance to their clients with three-quarters of respondents stating that they would like to sell more cyber insurance.
Ecclesiastical also asked brokers how they currently approach the subject of cyber insurance with their clients. Three-quarters (76%) said that they use the increasing risk of being hacked to talk about the need for cyber insurance with their clients. Around 60% said that they talk about complying with GDPR or highlight big brand data breaches and just 10% were using relatable claims to demonstrate the need for cyber insurance.
“There is clearly an understanding amongst business owners and managers of the need to assess and manage the risks associated with cybercrime,” Adrian Saunders, commercial director for Ecclesiastical explained. “However, the uptake of cyber policies remains low. According to the Cyber Security Breaches Survey 2018, just 11% of UK businesses have cyber insurance in place. This presents both an opportunity and a challenge for the insurance sector and brokers.”
The DCMS report² also highlights the level of investment being made by businesses as they look to improve security. On average medium sized businesses spent £25,100 on cyber security in 2018, the figure increased to £277,000 for larger organisations, with 30% citing the implementation of GDPR as a driver for this investment.
“The report also demonstrates a willingness among business owners to invest in protecting their businesses against cybercrime. Cyber insurance is a vital component of managing digital risks and therefore needs to be considered alongside investment in security software, better training for staff and other security improvements. As an industry, we need to find a way to help brokers demonstrate this to clients.”
When asked what they might need in terms of support from insurers, marketing materials, simplified wording and more training were the most requested.
“As part of our commitment to supporting brokers, we are currently investigating how we can help brokers have those important conversations about cyber insurance with their clients.”
1. Research undertaken by independent research agency FWD on behalf of Ecclesiastical. 250 UK business placing brokers were interviewed by telephone between 21 January 2019 and 15 February 2019.
2. Cyber Security Breaches Survey 2019 https://www.gov.uk/government/statistics/cyber-security-breaches-survey-2019