All companies are at risk, not just large organizations
As cyber and data breach exposures grow, agents are proactively working to understand and address those exposures. This is in part due to the growing number of data breaches and increase in cybercrime. It also reflects a general consensus among agents that most businesses have some exposure.
In fact, a study of The Hanover's top commercial line agents found that agents believe that 80% of commercial lines customers have a cyber exposure. They also estimated that only about 10% to 20% have purchased any cyber coverage, and that most customers don't understand their cyber exposures. At the same time, The Hanover's Small Business Risk report found that 94% of small business owners believe they are exposed to cyber and data breach risks. They also rate data breaches and cyber-attacks at the top of their list of concerns. Together, these findings indicate that small business owners are ready for agents to start the conversation about cyber coverage.
The reality of cyber risks by the numbers
The number of data breaches in the United States hit a new record in 2017, with documented breaches exposing 178.9 million records, according to the Identity Theft Resource Center. While the Equifax and Verizon data breaches made the headlines, there are dozens of claims scenarios that could potentially affect business owners today.
The reality is, small to midsize businesses are just as likely as larger corporations to experience a cyberattack or breach. However, these businesses may not be as well prepared to handle it, operationally or financially. Only 4% of companies with revenues lower than $2.5 million dollars have cyber insurance coverage and for smaller businesses, cyber breaches typically cost between $84,000 and $148,000.¹
Opportunity for agents to protect businesses
There are many ways agents can help protect their clients from this complex risk, starting with incorporating cyber and data breach questions into the customer risk assessment process. Experienced independent agents look for ways to learn more about the risks and solutions for their customers' businesses, like talking with experts in underwriting and loss control, and understanding the possible claims scenarios. Knowing the various forms of coverage can help agents select the best carrier for the risk. Carriers that specialize in this market will offer a wide range of services and information to help agents stay well-informed on the risks that exist and the solutions that are available.
However, cyber coverage can vary from carrier to carrier, further complicating matters. There is a large, growing market opportunity for cyber insurance, yet the market landscape is quite complex and is changing frequently. As carriers introduce evolving coverages, each customer brings a potential error and omissions risk. The Hanover's account-centric approach reduces the potential for conflicts by placing customers with one carrier for both professional and cyber insurance, for example.
In the face of these new market challenges, experienced agents are reducing vulnerability for their customers by introducing them to entry-level package solutions and carefully selecting carrier partners that offer more effective stand-alone cyber solutions.
Opportunity is only going to increase
Forbes estimates that cybercrime will cost approximately $6 trillion per year on average through 2021. This heavy cost and impact of cybercrime on businesses continues to increase, resulting in a tremendous opportunity for agencies to provide expertise and guidance in this area to protect their customers from losses.
It is in an agency's best interest to capitalize on the great opportunity to demonstrate its value by educating agents in order to help customers understand, protect against, and be properly insured for cyber exposures and data breach risks.
Having the right cyber coverage is critical, and The Hanover has coverage options needed to help protect your clients. Contact your Hanover team today to learn more.
Forbes – True Cost of Cybercrime for Businesses
ID Theft Center Year End Review
Small Business Risk Survey
Cyber liability and data breach guide
¹Cyber liability and data breach guide
LC OCT 2018-505