Cyber insurance is relevant to every type of business but the insurance industry needs to make it simpler so that more businesses understand why they should buy it, according to Graeme Newman, chief innovation officer at CFC Underwriting, a cyber liability specialist in London.
Newman was at the PLUS (Professional Liability Underwriting Society) Conference in San Diego Calif., where thousands of insurance professionals gathered for three days to hear about the latest industry trends.
Newman talked to Insurance Journal about the ever-changing cyber market. This interview has been edited for brevity and clarity.
Insurance Journal: The market for cyber insurance has now been around a few years and there has been time for us to see it change and maybe start to mature. Where are we at right now in cyber?
Newman: So, it feels like there’s been a fundamental shift in the last couple of years. If you look back, two, three years ago, it was all about data breaches and privacy. We saw the big retail breaches, that was all about compromised credit card information. In recent years it’s been all about business interruption. So, business interruption and loss of profits is the hot topic in the cyber market right now. We saw a couple of huge events last year … that affected millions of businesses around the world and really made people aware that cyber’s much more than just data breaches.
IJ: What can brokers do at the ground level to convince some of their business clients that cyber’s a good deal?
Newman: I think it’s important to remember that cyber’s relevant to every single type of business. It’s not just businesses that store sensitive data records like personal information and healthcare information. It’s relevant to any business that uses technology to operate. So, we’re seeing a greater interest from manufacturers, transportation companies, logistics companies. So, it’s really important that insurance agents pay attention to cyber, learn what they can, and really translate that in a way their clients can understand.
IJ: Why are businesses so slow to catch on to this? There’s plenty of news out there about it.
Newman: It’s the insurance industry. I think we over-complicate cyber. We try and make it more complex than it really is. So, I think it’s very hard for businesses to understand what it is and how it works. And it’s our job in the insurance industry to explain that to our clients in a clear and simple way.
IJ: What are some interesting or more unique claims you’re seeing out there?
Newman: We had a client. It was interesting, it was a food trucking business. Now, you don’t expect a food trucking business to need cyber insurance. But one day, the CEO came back into the business and he had a ransom demand. The criminals claimed to have taken all their data, unless they paid a ransom of $10,000. The business owner decided not to pay the ransom money, like many business owners, and they found out they had all their data deleted as a result. So this was a food trucking business. It’s a very simple business. You don’t think it’s very reliant upon technology. But they had everything taken, so they had no access to their employee records, they had no access to their roots, they had no idea about how much produce they’d have to buy. They had no idea where to locate their trucks. They had to build their business back up from scratch.
And that was a process that took them two months to get back on their feet and up and running. It was a claim that cost us almost $800,000. And that’s from something as simple as a food trucking business. So it goes to show that every business is vulnerable to cyber attacks.
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