Here at Riskheads we’re big advocates of technology for driving opportunities for insurance brokers. In fact in many cases technology is a huge potential boon for insurers of all kinds. However, there’s also a good case to be made for insuring against the risks of that technology too.
The Potential Risks for Cyber-Liability
Data is good. It gives us the ability to make better informed decisions, it allows us to approach our clients on a more personal and tailored level and it enables us to identify trends and either engage with them or avoid them as necessary. It’s the reason that businesses can compete on a global basis because they can use data to adapt to any environment.
The flip side is that holding that data is a responsibility. Your customers trust you to keep their personal information safe and your ability to compete is driven by securing your core business data.
If you lose or expose that data to others – you’ll be looking at liability for that exposure or loss. That’s where cyber-liability insurance comes in. It’s taking off big time in the United States since companies have come under fire for data leaks, etc.
In Europe things are still lagging behind. A survey conducted by Advisen (and sponsored by Zurich Insurance) last year shows that nearly 60% of European companies don’t have cyber-liability insurance. That’s a huge opportunity for insurance brokers to get involved with education and win considerable chunks of new business in the process.
The report that came from that survey suggests that most organizations in the UK and Europe are focusing on risk mitigation. That means they’ve invested in technology solutions to minimize the risks of loss of data and they’ve got plans in place to react to that loss. Yet, they haven’t carefully considered the impact of such a loss or taken insurance to lessen that impact.
The assumption that plans to protect data will always be successful is not a good one. Let’s look at some examples of big names that have lost data in the last few years:
- Amazon – Amazon’s cloud computing services crashed in 2011 and dozens of companies lost data. That’s despite the fact that Amazon has a strong reputation for pulling out all the stops to protect their client’s data.
- Google – Suffered the same problems in 2011 when their cloud computing services wiped data from Google Docs and Gmail. Many businesses are relying on the cloud for additional security but there’s still plenty of potential for things to go wrong.
In fact, the respected IT journalism site, The Register estimates that the loss of sensitive data within the UK has jumped by 1,000 per cent in the last 5 years.
In short British insurance brokers are in a great position at the moment. There’s a big potential market for cyber-liability insurance. It’s one that’s mainly untapped and the only real obstacle in growing that market is a lack of education about the risks involved for the larger business community. With 60% of companies reporting that they haven’t got the insurance and nearly 50% of them not even having it on their road map – isn’t it time your brokerage got involved with keeping the cyber-train on the rails?