Cyber Insurance: Why Buy It?

In the insurance industry, we are constantly challenged to show why our products and services are better than the competition, or even necessary. Some insurance products are required by law, like auto liability, some products are required to conduct business, like property insurance to secure a loan, and some of our products are considered optional. There is no outside demand to purchase these products. They are being purchased as a way to transfer the risk to the insurance company. An example of an optional product is life insurance. People understand the purpose, but since no one is “making them” buy it, many opt not to purchase it.

Cyber Insurance is currently in the category of optional. The insurance industry has not done a great job of educating the public on why they need to buy this product. We are caught up in proving the value of the coverage, but neglect to explain the true value.

The Services That Come With The Product

I just googled what to do after you think your company was hacked. Almost every article indicates the hacked company needs to research the scope of the breach and let the stakeholders know about it. None of the articles indicated that you should call your insurance broker/company if you have cyber insurance. Imagine being in a car crash and not understanding you need to call your insurance company. Why is this different? Most, if not all, cyber programs include forensic work to discover if a breach has occurred, and if you can identify the scope of the breach.

Buying insurance is not something we all talk about at parties, or with our friends. It is not an exciting topic, and isn’t noteworthy unless you have experienced a loss, and your insurance representative or product does something exceptional. If you have purchased a cyber product, give your insurance company a chance to do something exceptional. Ask them for information about preventing a loss, and if you think a breach has occurred, call them. If you are a business owner and haven’t purchased cyber insurance because you “don’t need it” do a little research into your obligations for a suspected hack. The price for the policy will look cheap compared to going it alone. This isn’t solely about having coverage, it’s about having a support system to help you navigate the system and to make sure you are doing as much as possible to follow the law. That is why you purchase this program.

Bob Barber

Chief Underwriting Officer