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Insurance agents know how important Cyber Liability Insurance has become in recent years. With high profile breaches of big box stores, it’s easy to understand why the novel policy has soared in popularity. However, like any insurance policy, there are some hurdles to consider, especially as it’s a new concept for the industry. In this article, we’ll explore the common issues that agents face when placing cyber insurance business and how they can overcome them.
Lack of data.
Most breaches go unreported since the law only requires the business to disclose them if they compromise customer data. For this reason, it’s a challenge for the insurance industry to grasp the full extent of breaches in order to accurately underwrite them.
To combat this, insurers are encouraged to create policies that are risk model-based as opposed to compiling actual data.
Evolution of risks.
As underlying exposures continuously shift, insurers adapt to one type of attack only to face a new threat technique. This makes risk management an ongoing predicament. Operationally, innovations in business — like IoT and autonomous vehicles — also pose new cyber-attack possibilities that need to be assessed and insured. The solution? The key to getting past this could lie in becoming a client’s full-service cyber risk manager as well as their chief risk-transfer vehicle, says Property Casualty 360.
Lack of uniformity.
Because cyber insurance is still in its infancy and policies are written in a customary manner, language variations vary from policy to policy. This lack of standardization leads to coverage gaps among carriers.
Moving forward, insurance agents and carriers will need to work together to come up with a standardized way to write the policies to ensure consistency.
The lack of risk knowledge.
Not everyone is an expert in cyber risks, which is why many business operators don’t understand their risks. Or, at least not the full extent of them. Agents need to tailor their marketing efforts to address the various risks that exist, not just the compromising of confidential data, that businesses face. This will raise awareness and better educate consumers for why they need such a coverage.
Cyber coverage case law isn’t yet clear. Because cyber coverage disputes haven’t made their way through the court system, buyers fear having to litigate a disputed claim due to differences over which policy applies or whether policy language indicates coverage. In addition, state regulations are often redundant or conflicting, resulting in potential exposures and coverage gaps, explains the article.
As previously mentioned, the standardization of these policies can improve their weight in court and ensure that coverage disputes are minimized.
About Mavon Insurance
At Mavon Insurance, we pride ourselves on our unique approach to insurance. We focus on integrity, communication, professionalism, respect and gratitude to help our clients succeed and place business in specialized markets. For more information about our products, or to become an agent, contact us today at (877) 426-2866.