Cyber cover is entering personal lines and offering protection against online bullying. But is it really a place for insurers?
Cyber insurance is expanding from the commercial space into personal lines. It started with high-net-worth individuals buying protection for their intangible assets. But now ordinary people can cover themselves against banking and online shopping fraud or identity theft. A recent development is cyber bullying cover, which can help fight off defamation as well as safeguarding children against online abuse.
According to insurers involved in this space, the appetite for cyber bullying cover is quite high because of the number of children and young teenagers who are active on social media. A quarter of children aged eight to 11 years old and three-quarters of teens aged 12 to 15 years old have a social media profile, according to the Children and Parents: Media Use and Attitudes Report by Ofcom. The 2017 report points out that 12% of 12 to 15-year-olds say they have been bullied on social media, equal to the number who say they have been bullied face-to-face.
Compared to 2016, parents of children aged five to 15 years old expressed more concerns about cyber bullying and their child’s reputation being damaged.
Sara Simmons, head of HNW at Covéa, notes: “Cyber bullying via social networks or online gaming platforms can be devastating to both children and their families and can take many forms including trolling, social exclusion and receipt of threatening, abusive or explicit messages.
“The increase in cyber bullying incidents has been well documented by charitable organisations and social action groups, and with several high-profile cases hitting the news, parents are understandably looking for more ways to support their children if they fall victim to a cyber bullying campaign.
“According to Ofcom, one in four children have experienced something upsetting on a social networking site. This can only be expected to rise with a reported three in four 12 to 15-year-olds having their own social media profile, which will increase consumer need for this added level of protection when it matters and compel providers to offer family and lifestyle covers above and beyond the traditional bricks and mortar protection.”
To address the rise in harmful online content, insurers have been incorporating cyber cover into their products, particularly in the mid-net-worth and HNW space. Cyber bullying protection often covers the cost for counselling services following a cyber bullying incident.
“When considering wraparound protection for our clients, we’ve reviewed and extended our family counselling coverage to provide an allowance for professional counselling fees following a cyber bullying incident; this is included within our lifestyle protection section,” says Simmons. “Our cyber coverage also includes identity theft assistance and online liability, which covers defamation and disparagement resulting from our clients’ online activities.”
Children aged eight to 11 years old
39% have their own smartphone, 52% have their own tablet
94% go online, for nearly 13-and-a-half hours a week
23% have a social media profile
Teenagers aged 12 to 15 years old
83% have their own smartphone, 55% have their own tablet
99% go online, for nearly 21 hours a week
74% have a social media profile
20% of 12 to 15-year-olds say they have been bullied; this is equally likely to have been face to face or on social media (both 12%), followed by bullying via messaging apps or text (5%).
17% of 8 to 11-year-olds and 29% of 12 to 15-year-olds who go online say they have seen something online that they have found worrying or nasty.
45% of 12 to 15-year-olds say they have seen hateful content online in the last year, an increase since 2016.
One in ten 12 to 15-year-olds have seen something online or on their phone of a sexual nature that made them feel uncomfortable
Almost half of parents of five to 15-year-olds say they are concerned about companies collecting information about what their children are doing online, a proportion similar to 2016.
In the 2017 research, parental concerns increased in the following areas:
- cyber bullying;
- children giving out details to inappropriate people;
- time spent online;
- children seeing content which encourages them to harm themselves;
- their child damaging their reputation;
- online content in general;
- and the possibility of their child being radicalised online.
Source: Children and Parents: Media Use and Attitudes Report by Ofcom
Guidelines and access
The government’s Cyber Essentials scheme, run by the National Cyber Security Centre, provides guidelines and access to training on a corporate basis. The aim is to help protect businesses against burgeoning cyber threats. While this scheme applies to the corporate world, other resources are available to individuals. Various organisations are offering assistance to parents who are looking for ways to protect their children from online exposures.
In 2010, the European Commission selected Childnet International, the Internet Watch Foundation and the South West Grid for Learning to form the Safer Internet Centre for the UK, which was established the following year. The centre provides advice to children and their carers and trains professionals who are in contact with young people. It also removes child sexual abuse images and videos.
The Share Aware campaign by the National Society for the Prevention of Cruelty to Children gives parents practical tips to help their children stay safe in the digital world and provides teachers no-nonsense advice and pedagogic resources.
The call to protect children against cyber bullying seems to be so loud that insurers have decided to step in and UK General is one insurer that has launched a standalone product providing cyber cover outside the HNW and MNW segments. Head of products Deirdre Donovan says that the service is under constant review to make sure it matches policyholders’ needs.
“As part of the claims process, we have a specialist team that has forensic and legal expertise to assist customers and this forms part of cover,” Donovan says.
“Our specialist team can identify whether both types of processes are needed for the claim. There are very few exemptions but the policy does require that events are reported within seven days of the customer becoming aware of the content.
“The product is under constant review as we still need to figure out what works best for this market. There is currently a lot of handhold through the claims process as it’s a new area and one which we are still learning about.”
“We did quite a lot of work and research with our brokers and in partnership with Munich Re, to help design this product. Cyber bullying is one of those areas that is growing exponentially and, if you speak to parents and realise what their children are exposed to, you find that there is a growing need.”
Along with counselling services, cyber bullying cover helps with the costly, time-consuming process of removing content from the internet. It is not just for children but extends to the rest of the family.
“The cover for cyber bullying usually entails removing material from any website and provides customers with the financial help to do that,” explains Donovan.
“There is also cover for counselling if the customer deems the need for additional support. Adults are covered too as part of the family unit. It covers instances like embarrassing photos and the removal of that type of material, it can be a long process and we’re still in the early days of providing this product. We are currently in the situation where we want to see how these things develop.”
The legal and forensic elements of cyber cover are crucial to stamp out online bullying. The forensic element identifies the person who is posting the content, which helps to remove it, while the legal component allows the insurer to take legal action against that person.
Mark Hawksworth, global specialist practice group leader at Sedgwick, says: “It’s important to have both the legal and forensic elements attached to cyber cover, particularly when dealing with a claim. Offensive content can be cached more than once, so the process of taking it down can take quite a while – it can take even longer if you don’t take legal action against the person.”
The forensic part can be costly and complex, especially for ordinary people.
Neil Wilks, head of technology at Auger, points out: “Insurance for cyber protection has mainly focused on the corporate sector and HNW individuals, but cyber bullying and fraud respect no boundaries. They are proliferating as the number and sophistication of software and devices grow. Many thousands of ordinary people have been affected.
“In the event of an incident, less tech savvy parents could benefit from the guidance of a claims process that would help handle the necessary steps to close affected accounts, introduce online curfews and prevent access to certain sites and apps.
“Where bullying is targeted at HNW-individuals of a sensational nature, engaging a digital forensic specialist to trace and remove online smears could run into tens of thousands of pounds, and such specific insurance would also be an option.”
Wilks continues: “One of the best preventive steps is to ensure the appropriate privacy settings are in place on any social media accounts, and it is worth seeking expert help if an individual or a business is concerned for whatever reason. There is a certain risk to be factored in here in terms of reputation.”
Although cyber insurance for individuals is beginning to gain traction, it is a long way from being released into the mainstream personal lines market. One of the reasons for that is that insurers feel people aren’t informed well enough yet on cyber risks and the exemptions included in policies: in a nutshell, customers may end up voiding their cyber insurance policies without realising it.
“There is a lot of appetite around cyber insurance and cover for cyber bullying, but there is an issue with the public that they don’t have full understanding of cyber,” says James Henderson, managing director of UK and Ireland at DAS.
“We know that there are alarming amounts of people who are not updating their software and not protecting computers. In the majority of cyber policies, there are considerable exclusions if a customer hasn’t taken standard measures to protect themselves. If we know that customers aren’t protecting themselves, and we put out a mass market product, then they’re likely to face exclusions.
“While there is an unquestionable increase in cyber risks, insurers need to make sure that there is a value in the product.”
Another obstacle to putting out a mass market cyber offering is that regular customers may not be able to afford the premium, says Henderson.
“We selected the HNW space for our cyber offering because it was a sensible and natural extension, and HNW customers have the affordability to pick up premium,” he says. “Another big opportunity is the mass market offering, but the harsh reality is that they may not be able to afford the costs. We have definitely seen examples in the market today that we would call into question. Is cover of this nature a sustainable thing? Does it offer value? Those are questions that need to be answered.
“We have seen products launched to market without clarity of who is going to buy it. It’s a buzz product and insurance isn’t that exciting, we are seeing things that aren’t effective. Creation of this cover needs to be slow and controlled.”
In the event of a claim for cyber bullying, insurers are most likely to cover the costs of the removal of damaging content and any necessary counselling services. But insurance lawyers are asking whether this is a place for insurers to step in.
“Insurers should be careful where they are providing remedial steps and costs to cover cyber bullying,” says Hans Allnut, partner at DAC Beachcroft.
“If someone says that they are the subject of cyber bullying and need emotional support, that is the same as a medical policy. But when insurers step into intervention, that’s where it’s going to be challenging. I’m not entirely convinced that there are many policies that step into that realm.
“When it comes to personal lines, the sensible type of cover would be to reimburse them for the costs of removing content and counselling. There’s definitely a need for this type of cover. But the question is whether or not it is the place of insurers to intervene in the way that they are.”
Insurers are cottoning on to the need to insure the risks presented by cyber bullying but the product hasn’t found its definitive shape yet and is still a long way off from hitting the mass market.
Zurich disappointed in new #discountrate. David Nichols, Ch Claims Officer: "The failure to change the discount rate to a balanced level will only serve to increase the cost and, therefore, affordability of certain types of insurance - especially for higher risk customers." pic.twitter.com/ac1CfBzfxX— Zurich Insurance UK (@ZurichInsUK) July 15, 2019
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