Cyber insurance is thriving – but cyber awareness is not

The significant increase in cyber threats to Australian businesses has seen cyber insurance become one of the fastest growing insurance products in the market

Written on 15 December, 2021
Tanaya Das

The significant increase in cyber threats to Australian businesses has seen cyber insurance become one of the fastest growing insurance products in the market, with Marsh reporting a 23 per cent increase in the number of Australian businesses purchasing cover in the first half of 2021.

As a risk transfer practice, cyber insurance does not negate the business owner’s responsibility to manage their cyber security. As cyber threats faced by businesses have become increasingly pervasive, the conditions which a business must meet to be eligible for a policy – and to maintain it – have become similarly extensive.

For small and medium enterprises (SMEs), these conditions often present a significant hurdle. Many proprietors are unable to answer the questions on the application as they simply don’t understand them.

To add complexity, cyber insurance focuses on insuring the value of largely intangible assets, particularly data.  This can be difficult for business owners to accurately quantify, leaving them often unable to accurately estimate their exposure.

Insurance brokers are then placed in the position of having to become a cyber educator to guide their clients through the application process to ensure acceptance of the application.

Poor cyber security knowledge isn’t just the concern of SMEs and their insurers. The losses suffered by Australia’s SMEs can be devastating, threatening the viability of businesses and the financial security of those it employs.

To address this challenge, the Australian Government has appointed CyberCX to create a program to improve the cyber resilience of SMEs.  Called Cyber123 for SMEs, the program educates SMEs and provides building blocks to develop their own cyber security plan. Free for Australian SMEs with fewer than 200 employees, Cyber123 will help your clients understand and actively participate in their own cyber security.

Please see www.cyber123.com.au for more information.

References:

https://www.insurancenews.com.au/daily/cyber-premiums-up-80-after-unsustainable-losses (“the number of Australian organisations purchasing cyber insurance grew by 23 per cent in the first half”). 

https://www.marsh.com/au/industries/energy-and-power/insights/energy-and-power-insurance-market-update-q2.html (Full Marsh report)