The emerging product class is the fastest growing risk of concern to SMEs
Cyber risks and data breaches are the fastest growing risks for SMEs, but brokers lack the confidence to sell the product properly.
An overwhelming majority of brokers, 85%, surveyed at the recent Knowledge Live event in London said they were not confident when talking to their SME clients about the value, importance and intricacies of cyber insurance.
Furthermore, 27% of delegates rated their confidence at the lowest possible level (see below) and only 4% said they were very confident when selling the product.
Arthur J Gallagher director of technology Richard Hodson said this was not a surprise, because brokers did not understand many of the fundamentals of a cyber policy.
“A lot of the problem, and the biggest barrier for entry to SMEs, is that the brokers they speak to don’t understand the products [enough to be able to give advice],” he said. “Everyone thinks of third-party claims (data breaches), but nobody thinks of first party losses.”
And this lack of understanding will be a worry for brokers, as more than 30% in attendance at the event listed cyber risks and data breaches as one of the fastest growing risks being faced by SMEs (see below).
CFC Underwriting director Graeme Newman said the rise of cyber crimes was a worry for businesses across the globe and that it was currently the largest uninsured risks for SMEs.
He also urged brokers to focus the selling of cyber products on the criminal threats being faced by SMEs, and not the issue of privacy that currently seems to feature prominently in many cyber insurance sales pitches.
“Cyber risk is the number one biggest uninsured exposure that any of our customers have right now,” he said. “It is horribly misunderstood and mis-sold by the insurance industry.
“We looked at what happened in the US, got buoyed by the success in America of a particular line of coverage, privacy, and we’ve copied it and assumed it would work for the rest of the world.
“The cyber market in the UK is not about privacy. Cyber is about something much more fundamental – crime.”