The demands of the Insurance Act could result in non-specialist brokers steering away from selling cyber products, according to Biba.
Speaking at the Insurance Times Cyber Charter, Biba corporate affairs manager Andy Thornley said that because the cyber insurance market was still in its infancy, brokers may lack the necessary knowledge needed to fulfil their obligations under the Act, which comes into effect in August.
Thornley said: “For emerging markets like cyber insurance, I think we might see brokers working in tandem with the market. However, the Insurance Act has people saying ’perhaps I don’t know a lot about this so I should step away from it - we’ll just leave it for the specialists’.
“There are a number of challenges for brokers and the Insurance Act will increase the responsibilities the broker has. Broker knowledge is customer knowledge. In terms of presentation of the risk, that needs to be done to an appropriate standard.”
As a result Thornley says there may be an increase in the number of specialist cyber brokers, who are able to understand and present cyber risk in a fair way that is compatible with the Act.
Biba, which has launched an Insurance Act Implementation Guide for brokers, has been campaigning to highlight ways in which businesses can build resilience against cyber business interruption risk and cyber crime risks.
The trade body is working with the government and other stakeholders to improve recognition of the value, awareness and take up of cyber insurance protection.
The ABI has also called on the government to create a database where companies would be obliged to record details of cyber attacks.
The database would help overcome the lack of hard data on cyber attacks that is making it hard for insurers to provide appropriate cover.