Spotlight: Cyber - Personal cyber – no longer just a HNW thing

Despite growing interest for cyber cover among consumers, insurers have been slow to respond as the risk for individuals increase and their own exposure becomes more real.

Paul Emery, UK managing director for Marsh private clients, says: “Insurers are becoming more conscious of the cover they provide, they are clarifying their wording, and some are even backing away or not progressing initiatives in this space for individuals.”

Although Marsh’s private clients arm focuses on high-net-worth individuals, he believes many of the themes they face are similar for everyone.

“We are encouraging insurers to work with us to include cover that is better and wider because there is a gap at present that is creating a risk for both clients and brokers advising clients.”

While cyber insurance has been a feature of HNW products for several years, it is mainly absent in the mainstream personal lines market.

“Many HNW products include cyber cover as standard, some as an enhancement to the standard policy. I believe the standard personal lines market will follow the HNW market and we are working with our insurer partners to develop this,” Kelly Ogley, CEO of A-Plan, comments.

Meanwhile, Jonty Mongan, head of cyber risk management at Gallagher, thinks it will follow the same cycle as corporate insurance. He points to the difficulties of understanding the risk: for example, for a person who has numerous online accounts, with the likes of Amazon, Twitter, etc.

“Each individual’s potential loss will differ so much based on who they are and what potential information is in their private emails. So it will depend on how we quantify the risk in the premium.”

“It’s one thing to know there’s a risk for personal data, but how do you actually turn that into an insurable product, with a solid algorithm that generates premiums relative to your risk exposure, and make that competitive without introducing a whole load of mitigation issues because you’ve mis-sold, under-sold, or over-sold it,” Mongan ponders.

“Do I think personal cyber insurance is a thing of the future? Absolutely. But it may be the case of the technology providers furnishing it. So if you have an email with google, you will buy cover as an optional extra from them.”

Currently, what cyber cover now exists is mostly as an add-on option to home insurance, for example. Or, with credit cards, most people are automatically covered by their banks for fraudulent activity.

Emery believes the role of cyber insurance should be to respond where cover doesn’t already exist, including for cyber extortion, social engineering, cyber theft, hacker damage and cyber media liability.

He explains that as a broker it’s actually quite difficult when cyber is bundled with property insurance as each insurer will have very different wordings and levels of cover, or no cover at all. This makes it difficult to recommend cyber insurance on the back of what might be the best home insurance for a particular client, and whether it might have cyber insurance suiting their needs.

“Inevitably cyber will have to become a separate policy rather than just a bundled add-on benefit – whether that’s brokers or insurers driving it – in the same way travel did because the cover is becoming so important to clients,” Emery argues.

Appropriate cover

According to him, individuals need to check their cover for financial loss and the circumstances leading to financial loss – whether somebody is knowingly giving away information or it’s finding its way to criminals through hacking or malicious software. He emphasises the need to really understand what could create the loss and whether that’s actually protected.

One example is intercepting of emails for financial transactions – whether that be for school fees, deposits on property or purchases of high value items – and bank details changed. Whether cover is attached to that loss or not depends on the individual insurer’s wording.

“It’s about us understanding the cover available and our clients’ exposure, and ensuring we are explaining to them where the cover is and is not,” explains Emery.

On the skills insurance businesses need, Ogley concurs: “It’s about understanding the different types of cyber threats and explaining the differences in available cover to our client.”

One emerging risk Marsh is pushing insurers to provide cover for to address client demand is against loss or theft of digital assets (non-fungible tokens, crypto-currencies and digital art). Insurance for these types of assets comes under cyber. For instance, some digital art has been auctioned for hundreds of thousands of pounds but remains uninsured.

Added services

Marsh is planning to review and broaden its cyber cover and service due to rising number of clients experiencing financial loss through being hacked or tricked by some sort of social engineering. Cyber-attacks, whether through hacking, phishing or malicious software, are becoming increasingly sophisticated.

Post-loss services are key. Emery explains how if somebody’s identity has been stolen, or site replicated impacting one’s reputation, or important data lost, or their home security breached, it’s the post-loss recovery and remediation that’s really important to clients.

Marsh advises clients on how to protect themselves better, particularly in how they use social media. People love to share pictures of belongings they are passionate about, but it becomes easy to target individuals posting photos of high-value items like cars and watches, he explains.

Alexandra Foster, director, manufacturing, digital industries & financial services at BT, says: “Education plays a part, and on the back of education an ecosystem comes together to help protect individuals. Organisations, whether they be the insurers, manufacturers of smart products, technology providers or telcos should consider providing cyber alerts and education on the threats and how to keep safe.”

She also believes that as we become reliant on Internet-of-Things-enabled devices in our homes, it will increasingly become the responsibility of the IoT device manufacturer to make cybersecurity part of the policy of the product itself.

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