Risk management services are an important way cyber insurance adds value for small businesses, according to a new I.I.I. paper.
In Protecting Against #Cyberfail: Small Business and Cyber Insurance, I.I.I. co-authors James Lynch and Claire Wilkinson say:
“The provision of these types of services is considered a growth area in the cyber market for SMBs, where price may be a barrier to insurance coverage in the first place. For larger companies, cyber-related risk management services may be offered at a discount or for free.
“For SMBs in particular, offering a risk management or training solution where they can learn more and keep themselves up-to-date on current threats is perhaps most valuable.”
Also heard at the Advisen Cyber Risk Insights Conference in NYC last week: part of the value proposition for SMBs is that cyber policies offer solutions, not just coverage.
Andy Lea, vice president underwriting for E&O, Cyber and Media, CNA, told the conference: “The value proposition is more prominent with SME and middle market companies that just don’t have resources available in-house to manage risks. This is an opportunity for brokers and carriers to add value.”
The percentage of companies buying cyber liability insurance is increasing substantially, according to an annual survey jointly produced by Advisen and Zurich.
For the first time in the three years that the survey has been administered, more than half of respondents claim to purchase cyber liability insurance.
In response to the question Ã¢â‚¬Å“Does your organization purchase cyber liability insurance?Ã¢â‚¬ some 52 percent responded yes, compared to 44 percent in 2012, and 35 percent in 2011.
Only 38 percent said their organization did not purchase this protection, down from 50 percent in 2012 and 60 percent in 2011.
Of those companies that do purchase coverage, some 72 percent have done so for more than three years. This represents a 10-point increase from 2012 suggesting that when organizations purchase the coverage they see enough value to renew it year after year.
Even those companies that have not bought cyber coverage are thinking about it.
Half (53 percent) of survey respondents that do not currently buy cyber insurance are considering purchasing it in the next year Ã¢â‚¬“ a 28 percentage point increase from 2012.
This is an indication of the continued shift in the cyber insurance marketplace, from a product that was interesting but not a necessity to one that is becoming a must have.Ã¢â‚¬
Check out a recent I.I.I. paper on cyber risks.