The home insurance coverage your clients don’t know about

Most home insurance clients don’t know they could be covered for identity theft, Top Broker Summit attendees heard Monday.

“On the personal lines side, there have been a number of companies in Canada that have offered identity theft coverage for 10, 12 or 13 years. I think most Canadians don’t know it’s available,” said Paul Kovacs, founder and executive director of the Institute for Catastrophic Loss Reduction.

“Some insurance companies throw it in. Others charge for it. But it’s certainly not a topic that I think the public is aware of. Identity theft is a growing threat and there is an opportunity on the personal lines side to talk about the role of the industry,” Kovacs said while moderating a luncheon panel at Top Broker Summit, produced by Canadian Underwriter and held at the Ritz-Carlton in Toronto. “Most Canadians don’t know whether they have it or not.”

Paul Kovacs, founder and executive director of the Institute for Catastrophic Loss Reduction. Photo by Adam Malik

Identity theft is when a criminal uses a client’s personal information (such as a name, social insurance number, or credit card number), as defined by CAA Insurance, one of the many companies that offer identity theft protection with home insurance. In CAA’s case, the coverage can be added for $25 a year.

For business clients, cyber insurance can cover a variety of losses, such as legal costs and damages, if you are sued for a privacy breach. It can also cover the cost to restore or recover data caused by a breach, denial-of-service attack, or ransomware, Insurance Bureau of Canada reports.

What exactly gets covered depends on the individual policy.

“There is absolutely no standard,” said Patrick Bourk, principal and national cyber practice leader for Hub International Ontario, during the Top Broker Summit luncheon panel. “Every insurer will do things a little bit differently.”

Cyber is a profitable business for insurers, but it it’s also linked to a very high risk compared to other lines, said Kovacs.

Some insurers are concerned about a single catastrophic cyber loss that affects multiple victims, costing the industry billions of dollars’ worth of claims payouts, suggested Bourk.

Asked by Kovacs how he sees the cyber market in five to 10 years, Bourk suggested prices might increase as cyber losses mount. “I think there is going to be some insurers who will realize, ‘Okay, maybe this is not necessarily for our risk appetite,’” Bourk responded.

Also on the panel was Jacqueline Detablan, vice president of specialty at CNA Canada.

“How we underwrite those risks has changed significantly,” said Detablan, who was previously a vice president of financial lines at American International Group (AIG) Canada. “Back in the day, we would have a real IT engineer do a deep dive on almost every single risk. We still to that on more complex risks.

“But [now] it’s more of a volume play, because you are going to have losses and you need to have a larger pool of premiums to cover those losses.”