August 6, 2021 by Canadian Underwriter Staff
The Insurance Bureau of Canada says 99% of Canadian organizations have reported an increase in cyberattacks since COVID-19 began, but many brokers appear to be struggling to sell cyber.
“Anecdotally, Canadian brokers have indicated that many clients don’t believe a cybercrime is likely to happen to them and they don’t fully understand their exposures, which adds to the challenge of selling cyber insurance to businesses,” Sovereign Insurance says.
Allianz Global Corporate and Specialty (AGCS), analyzing $1 billion of insurance industry claims, has shown cyber incidents including cybercrime accounted for 47% of the risks in financial services. Rounding out the Top 5 risks were the pandemic outbreak itself (40%), business interruption (31%), changes in legislation and regulation (26%), and macroeconomic developments (19%).
Insurers see a rising number of losses from outages or privacy breaches with third-party service provides a potential weak link, concludes its Financial Services Risk Trends: An Insurer’s Perspective report.
Despite growing awareness of threats, and an increase in frequency and severity of attacks, there hasn’t been a concurrent rise in demand for standalone cyber coverage, says Sovereign Insurance.
In a Deloitte survey on cyber insurance growth conducted last year, middle-market companies (between U.S.$250 million to U.S.$1 billion in annual revenue) were asked why they didn’t purchase a cyber policy. Reasons included concerns about product issues, distribution, and buyer concerns. Over 41% of respondents felt it was too expensive, 22% said their broker or agent did not suggest coverage, and a further 17% said they weren’t aware coverage was available as a standalone policy.
While these barriers mean “cyber isn’t necessarily an easy sell” Sovereign advises there are ways brokers “can overcome challenges in the marketplace and make the case for cyber insurance”.
Feature image via iStock.com/erhui1979