Cyberscout (USA) is a cyber solutions firm that work within the insurance industry to help them build, launch and manage cyber solutions that are geared towards the underserved classes such as households and small commercial customers. They work with 275 companies in 27 countries, 100 of which are mutuals.
For Cyberscout, cyber means “people’s control of machines”. As machines get more intelligent, this means looking at how to manage this technology. The $7 billion cyber insurance industry is mostly enterprise risk, insuring large companies. Small commercial and personal cyber insurance is a new type of insurance which has been overlooked, but is growing. Insurance against cyber risk has benefits for the insuring organisation, such as being perceived as an innovator.
People are in front of a screen 11 hours a day and look at their phones 96 times a day on average. Post-pandemic, the average number of connected items in a household is 25. Hackers have taken advantage of this and increased their focus on households and small businesses. There has been a 700% increase in phishing attacks, and ransomware attacks on homes are the number two type claim. The commingling of work and home only increases this risk to families and businesses as it greatly increases the attackable surface.
A survey by Cyberscout, asking respondents where they go for cyber solutions to protect their family from cyber risks, found that 31% would go to their insurance company; 21% their bank; 10% their employer; and 38% did not know. The insurance industry is the logical source people would go to for cyber protection.
A survey of ICMIF members found that 59% had cyber insurance add-ons to their policies; and 15% were actively working on introducing a cyber offering. The 26% that were not pursuing cyber offerings stated that their main reasons for this were no in-house cyber expertise; concerns over systemic cyber and risk aggregation; and lack of interest from policyholders in cyber.
When asked what was most important when delivering a cyber offering: 46% said post-loss services; 31% said comprehensive coverage; 19% said risk assessment; and 4% said pre-loss services. Coverage is not limited to hacking, phishing and fraud, but also covers households for issues such as cyber bullying. Risk management, protection and prevention are important to ICMIF members, and they appear to be looking for a holistic solution, not just insurance coverage.
A case study by Univé showed that five years ago, when Univé launched an optional cyber product for the private market, it was unsuccessful. Market research revealed that there was low awareness of cyber risk; problems with knowing vs acting; responsibility of insurer and advisor; and a lack of willingness to pay. Their solution was to partner with reinsurers and Cyberscout and fully-embed cyber insurance into all insurance products as standards, making them non-optional.
