Small- to medium-sized insurance companies not including cyber insurance packages in their coverage offerings may be missing a huge opportunity for growth. Statistics show that cyber crimes are on the rise and experts project that these trends will continue despite the most sophisticated cyber security measures employed by businesses around the globe.
Interestingly, smaller companies across a broad variety of business sectors are posing a significant growth opportunity for insurers, as their take-up rates for this kind of coverage remain lower than the coverage purchased by their larger counterparts. This is most likely due to a general complacency by these smaller companies regarding the risks of exposure to cyber crimes including system failures, data breaches and ransomware invasions that can interrupt the flow of business and cost large sums of money to overcome. They simply do not think this could happen to them.
Why Aren’t More Smaller Insurance Companies Offering Cyber Insurance?
Underwriting cyber policies can be difficult, especially for the smaller markets. The insufficiency of historical experience and tested models for cyber exposure makes pricing a real challenge that is often not included within insurance management software parameters.
Therefore, underwriting and pricing for cyber insurance are being calculated by competition and other market forces rather than by models and determinations for actual risk exposure. As cyber crimes continue to increase, insurance management software for smaller insurance companies is expected to include underwriting and pricing tools to help smaller insurance companies provide this coverage for their clients.
Turning Risk Into Opportunity
Experts are predicting that 2018 will be a pivotal year with businesses seeing cybersecurity as less of an IT problem and more as a primary business risk. This provides a tremendous opportunity for smaller insurance companies to partner with their clients to develop policies and procedures that are geared toward prevention to a greater degree. Rather than train employees in how to deal with a breach, insurers can help these companies educate employees on how to detect or prevent a possible breach including:
- Identifying suspicious email and/or attachments
- Developing written policies and procedures establishing a protocol for the processing of sensitive data
- System logs and password management
As this market grows and develops, insurance management software will be equipped with improved tools and capabilities for processing data, making a better foundation for future underwriting and pricing models as they evolve.