Agents Don’t Fully Understand Cyber Insurance

Eduard Goodman, Chief Privacy Officer of identity theft protection firm, IDT911, recently discussed the importance of cyber insurance in an Insurance Journal podcast.

When asked to assess the average insurance agent’s knowledge of cyber insurance, he graded them a C-, citing that “the average agent broker doesn’t truly understand what the risks are, and what’s available out there in the market to address those risks.”

Insurance agents in major metropolitans throughout the U.S. have to be experts in cyber liability coverage because their cities are more sophisticated, and clients in those cities demand that type of professionalism.

Goodman feels that agents must provide cyber insurance coverage options to stay competitive in the current landscape, which is challenging due to the fact that most agents and brokers don’t view cyber security as a common risk.

Beyond providing a competitive advantage, adopting a new mentality about cyber insurance is more about self-preservation for an agent –– it’s the underlying lynchpin to learn everything there is to know about this very important, and increasingly prevalent, coverage.

Let’s say an insurance agency offers professional liability coverage with a per claim deductible of $25K, they wouldn’t consider a claim where cyber liability wasn’t offered or discussed, as it would entail a huge risk to them.

Real-world examples of this are when a law firm becomes the victim of a cyber attack and their files are ransomed, or when a wholesaler loses millions of dollars in an illegal wire transfer.

In both cases, either their crime coverage or their cyber liability coverage would have responded, but if these organizations don’t have cyber coverage at the time of the incident, they are plumb out of luck.

Any company that cares about data privacy has either already invested in, or is actively considering cyber liability and data breach insurance coverage. The benefits of this can be huge, especially in the event of a data breach.

This type of insurance can cover costs like identity protection solutions, legal, PR, liability, customer/employee notification, and more.

Cyber insurance is just another way for businesses to comply with privacy laws and regulations, because companies and individuals simply can’t put a price on peace of mind.