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The Actuary The magazine of the Institute & Faculty of Actuaries

Insurance brokers failing to understand cyber risks

Nearly one-third of UK insurance brokers admit to having a poor understanding of cyber risks, despite the majority recognising the issue as one of the most important facing the industry.

Cyber insurance market to grow rapidly in coming years ©iStock
Cyber insurance market to grow rapidly in coming years ©iStock

That is according to a survey of brokers by the DAS UK Group and HSB Engineering Insurance, finding that 31% believe they have a “poor” or “very poor” grasp of cyber risks and insurance.

At the same time, 56% rate cyber threats as among the most pressing challenges facing customers, with hacking, online fraud, identity theft and phishing identified as the top four risks.

This comes after the cyber insurance market’s value was forecast to increase from $3.4bn (£2.5bn) to $16.9bn by 2023, with 58% of the respondents predicting rapid growth over the next two years.

“There is certainly plenty of potential for growth, and it’s very important to remember the vast potential of the consumer market,” DAS UK Group director, James Henderson, said.

“For many people technology around the home is no longer a luxury, it is an absolute necessity, providing entertainment, a means of communicating, and organising day-to-say life.”

The survey findings reveal that cyber insurance products are sold by over two-thirds of brokers to businesses, but that only 13% offer them to consumers.

It was also found that 90% expect demand for cyber to increase considerably in the next couple of years, with almost a quarter stating that simplifying policies would be the best way to sell more products.

Providing a better explanation of policies was considered another way of achieving this, as was improving the provision of training for brokers, cited by 29% and 15% respectively.

“Whether a standalone or integrated solution, cyber insurance is undoubtedly going to become protection that all consumers and businesses will seriously need to consider,” Henderson added.

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