Cyber insurance, once considered a “nice to have,” today is poised to become a must-have in the new business realities created by the COVID-19 pandemic.
We find ourselves in a moment of great uncertainty. COVID-19 changed everything practically overnight. Corporations sent entire workforces home to work, and many brick-and-mortar businesses quickly switched to e-commerce. These new realities present new questions and new risks.
A bigger cyber-attack surface
Insurers need cyber insurance offers to help customers mitigate new and expanding areas of risk. The surface for cyber attacks has expanded exponentially. Six months ago, many businesses may have been working toward remote-work models. Now, in the wake of the COVID-19 response, those models are adopted, whether they were ready or not.
I shudder to think of the proprietary corporate information flowing through home routers right now, with few to no security protocols. The security infrastructure built over the course of years in office settings may be entirely absent. There are probably hundreds or thousands of routers in use with “password” as the password or with no password at all.
Cyber insurance, while small compared to more mature lines of business, has grown steadily in recent years. According to Swiss Re, cyber premiums doubled between 2016 and 2019. Even pre-COVID, small businesses were increasing their e-commerce capabilities and, in large part, driving that demand. Now, digital sales are a matter of survival for many small businesses.
Not the same-old cyber cover
There is significant opportunity for insurers to meet the current level of demand for their existing cyber products. There is also opportunity to re-invent the cyber insurance offer to meet evolving customer needs.
Consider a beginning-to-end cyber solution consisting of at least three different components:
- Continue the simple core cyber cover insurance to compensate the customer in case of attack.
- Enhance prevention or mitigation offers to improve security in the customer’s cyber environment.
- Create new restoration offers to help restart the customer’s business, which might include online restoration work in the e-commerce and work-from-home environments.
This is an increase in magnitude and scope of cyber insurance offers. It presents insurers an opportunity to defend market share and expand into new customer segments. It’s also an opportunity for incumbents to partner with start-ups and Insurtechs to bring more innovative offers to market faster.
