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Roundtable: Cyber - the next big opportunity in personal lines

LHS Cyberscout Roundtable
Pictured, l-r: Jonny Groves, cyber underwriter, Tokio Marine Kiln; Mauro Signorelli, technology and cyber senior underwriter, Aspen Insurance; Aleks Leonard-Rawlings, product manager, UK General; Nick Brabham, head of private insurance, Direct Line Group; Chris Gissing, business development manager, Cyberscout; Tom Spier, commercial director, Cyberscout; Hege Aschim, head of alternative distribution, specialty personal lines, Chubb; Steven Cunnington, product development for cyber solutions, Collinson Group; Daniel Carr, chief innovation officer and cyber lead, Occam Underwriting; Geoff Pryor-White, CEO, Tarian Underwriting; Kate McGovern, senior high-net-worth technical underwriting lead, Covéa; and Martin Stimpfle, head of cyber consultant team, Munich Re

Cyber has been long-touted as offering insurers and brokers a huge opportunity in commercial lines – from SMEs to corporates. But as individual consumers become ever more aware of their vulnerability to data breaches and cyber attacks, an equally large opportunity potentially exists in personal lines too. With this in mind, Post, in association with Cyberscout, brought together a panel of experts to discuss the potential for personal cyber insurance and look at how this might manifest itself

The session began with participants discussing how insurers can move cyber cover out of the mid and high-net-worth space – where it is mostly offered at present – into the mainstream.

Tom Spier, commercial director at Cyberscout, said: “Over the last 15 years we’ve seen several different types of solutions come into the market and then grow, and trickle down into mainstream insurance.

“It has normally started as a HNW proposition, and what we find is that it pretty quickly gets picked up by the mass market divisions on the personal lines side.”

Steven Cunnington, product development for cyber solutions at Collision Group, said that it is really the industry that has to lead it rather than consumers.

He said: “It doesn’t have to be a common product, but it has to suit your individual customers. Every insurer is different and every customer base is different. The product needs to fit that appropriate customer base.”

Geoff Pryor-White, CEO at Tarian Underwriting, said: “If you look at the commercial aspect, there are still many customers that struggle with what a base coverage is. If you take cyber into personal lines, then you need a core base product customers can relate to.”

Jonny Groves, cyber underwriter at Tokio Marine Kiln, added that a standalone cyber cover might not appeal to everyone.

He said: “I don’t know how many people would buy a standalone personal lines cyber insurance policy. But if it’s embedded into their homeowner’s policy they might be more interested.”

Nick Brabham, head of private insurance at Direct Line Group, highlighted that the product needs to be created with the customer in mind.

He said: “Too often in the past, we’ve created products without really thinking about the customer value, so there’s got to be push there from the customer. It’s different in the HNW space, but in the mainstream space, you’ve really got to understand where there’s value for your client or your customer. In the past, we’ve been far too keen to just sell a product without really understanding does it create value for customers.”

Customer views

Speaking of why customers might not be interested in a standalone cyber product, Chris Gissing, business development manager at Cyberscout, said: “Cyber still has that mystique and nuance about it, that it’s something unfamiliar.”

According to Gissing there is also that fear factor from insurers because there is not a lot of data available.

He added: “There’s an understanding that there’s a customer desire and need for this product, but it’s almost like people are not willing to make that jump and leap of faith in launching a product.”

Meanwhile, according to Cunnington, even when cyber is included in a customer’s policy, they often don’t know about it.

He said: “Collison did some research earlier this year and 50% of the people we spoke to didn’t really understand whether cyber was in their policy already or not.”

However, Daniel Carr, chief innovation officer and cyber lead at Occam Underwriting, said that there is no evidence that individuals want cyber insurance cover.

He said: “They understand the harm of the cyber environment but they don’t quite know who to blame yet, and that’s systemic across every area of society, be that the judicial society, the regulatory environment or the commercial environment.

Educating customers

The participants agreed that in order to break the “it will never happen to me” approach to cyber insurance and make it a success, insurers and brokers need to educate customers.

Hege Aschim, head of alternative distribution, specialty personal lines, at Chubb, said: “We work mostly with mobile phone insurance and we work with business to customer. We have seen a massive need for cyber insurance from both of them because it aligns very much with their Internet of Things propositions, their cybersecurity, and their family propositions to have a personal cyber product.

“There is a massive opportunity here but the key is to get the marketing message correct and also to bundle in with relevant services that appeal to consumers.

Spier has agreed that embedding cyber into existing products might be more successful than trying to get the message out there.

He said: “Small businesses need more knowledge in this area and we need to educate people in order for them to buy a new product.

“No one is genuinely going to go around the UK and educate 65 million people as to why they need to buy a cyber insurance policy. What we found to be most successful is when very low levels of cover are embedded into products customers already buy.”

One of the discussion points at the roundtable was whether customers are more interested in financial risk transfer or access to services provided under the cyber insurance cover.

Talking about what will be the selling point for customers, Carr said: “The services and the helpline and that assistance for individuals is a clear, demonstrable need because the level of awareness is still not going to be there with very complex technologies.

He added that a helpline that can help the customer understand why their product is broken or help them make it work is “the most critical thing that clients need”.

However, Spier said that the need for assistance with technology is not reflected in the types of incidents Cyberscout is dealing with.

“We dealt with around 23,500 incidents last year for people, 89% of those involved financial fraud of some description, so that was the vast majority of the things that are happening to people and that people need help with.

He added that 99% of those Cyberscout was able to resolve by working with financial institutions or banks so “customers didn’t need to call on that financial risk transfer element in the policy”.

Partnering with third parties

Mauro Signorelli, technology and cyber senior underwriter at Aspen Insurance, explained how Aspen offers cyber solutions to its customers.

He said: “We tend to offer these solutions on an arrangement basis, so we partner up with home and content insurance, for example, to provide these as an add-on.”

He added that insurers need to “ensure that the coverage that we offer under this proposition is relevant to customers and meet the price point that makes it attractive to the consumer.”

“Everyone is very interested in the services that this product provides and assistance, but may be less willing to pay the premium that comes with it. There is a responsibility or an interest from the providers of home and contents insurance to try and be relevant and provide coverage that is relevant to their customers.”

Talking about whether there’s a market for insurers to partner with telecoms and employee benefits services to provide these kinds of services and cover, Cunnington expressed that while there might be an opportunity within the employee benefits services sector, telecoms might be trickier.

Cunnington said: “If you look at employee benefits and you look at the US market, identity protection and identity cover is a very big part of employee benefits in the US – so there’s an opportunity within that sector. Telecoms and mobiles are a little bit different because it’s too niche and you would run a risk of crossover cover.”

Aleks Leonard-Rawlings, product manager at UK General, said that people tend to gravitate to the expertise.

He said: “Customers see a big company name and think they know what they are doing, they are more likely to be an expert.”

He added that if customers already use one provider for their broadband, wi-fi and everything else they are more likely to trust them if they introduce cyber insurance.

He added: “It’s the expertise, the providers of cyber cover will merge very well with those who provide utilities and those who provide broadband, and stuff.”

Types of cover

Participants also discussed cyberbullying cover and that’s something the market is in need of.

According to Aschim, cyberbullying cover will be attractive to families because it will resonate with those who have children.

She added: “But it does cover a lot more than that. Adults running small businesses can also be targeted, whether its harassment or a poor review, people will be in extreme distress if they can’t get help”.

Carr agreed that it’s not just children that are at risk of cyberbullying. He said: “Things like revenge porn can be a prime example.”

He explained that intimate pictures posted online can be difficult to legally retract from the internet, and even when they are removed they will often be reposted on another site. 

He added: “Technologically, it’s challenging, but there is incredible emotional distress to the individual to try and get that rectified and at great legal expense, while there’s also no natural home for that legal expense to actually be picked up.”

Leonard-Rawlings said: “It’s a professional issue as well. So you have the revenge porn bordering on criminality itself, and then you have the commercial side – a bad review on Trip Advisor causes financial loss.”

However he added that when it comes to “actual bullying” people often don’t believe that this can happen to them or their children.

He added: “So, that aspect is quite subjective and I don’t think there’s enough information yet to develop something that can cater for that aspect.”

Driving the product development

Talking about who is going to drive product development Pryor-White said: “It’s going to be all of us, because if you look at the standard commercial cyber products five years ago versus now, it’s very different. This is a threat that’s continuing to change as we go through. So, in reality, you’ve got a lot of different people looking at things that they feel are relevant to them and coming out with products.”

“Now what you’ll see is a product in five years’ time that, actually, is relatively standard and will have different nuances to it, but you’ll have a base product that is relatable to the customer. Until that point, you’re just going to get very different products coming out, some of which will really strike a chord with the customer, some of which won’t.”

According to Cunnington, insurers have a duty to introduce new products to the market.

He said: “You then need to show customers why they need it. Statistics show that cyber is the fastest growing crime and there’s clearly a need for it, you just need to bring the product to the market and let customers choose whether they want it or not.

“You then need to decide whether you will embed this product onto the existing policy or does it become an added extra.”

Becoming mainstream

Talking about how long it will take before cyber becomes mainstream, Kate McGovern, senior HNW technical underwriting lead at Covéa, said: “We need to break it down. If you’re looking at risk management and advice lines, it’s already happening, certainly in the personal lines sphere. However, dual coverage will follow on in a couple of years.

McGovern added that public awareness of cyber insurance is going to be raised by aggregator sites.

Martin Stimpfle, head of cyber consultant team at Munich Re, said: “It’s difficult to judge when we can see cyber insurance become mainstream.

“We’re still trying to figure out cyber commercially, how quickly it’s actually growing, but if I look back to two years ago when we were having this initial conversation, it was around why do we need to buy this product, now it’s more around how we make the coverages spread to the policyholder.”

He added that in his opinion it will take a few years until cyber insurance becomes mainstream. 

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