In the minefield that is cybersecurity in 2018, cyber insurance is touted as a must-have for businesses – but it’s a highly complex area that even some brokers don’t understand, according to one law firm.
A recent survey by Fox Rothschild found that 70% of respondents carried cyber liability insurance – a figure that is significantly higher than many other findings.
But, according to the firm’s chief privacy officer, not all cyber policies are created alike, and brokers need to ensure they fully understand the policy they are selling in order to properly service clients.
“When it comes to cyber at the broker-level, it truly is a specialty,” Mark McCreary, who is also co-chair of Fox Rothschild’s Privacy and Data Security Practice, told Insurance Business.
Alongside understanding the nuances of the various policies on offer from respective insurers, brokers need to better understand the claims process too, he said. However, that could take time, particularly as – according to the research – only 21% of those with coverage had filed a claim over the last five years.
“If I’m a broker and I have a customer that has a claim under a policy, I may not really appreciate exactly how you get to those points, and what the steps and costs are, until I go through it several times. Until you do that, even the broker doesn’t understand how the system works,” McCreary explained. “It’s something that you have to really understand how the policies are different and understand how the claims made are different.”
The study found that while take-up on cyber coverage was relatively high, many executives lack a solid grasp of the policies’ limitations. But rather than attempt to educate business leaders themselves, McCreary says they should be able to rely on well-informed, specialist brokers.
“I think there’s no question, because there is a small army of cyber insurance experts out there, that training is the right answer,” he said.
“I don’t look at the company head as needing to have that expertise. Instead, they should have a broker or a [lawyer] that knows how to look at this stuff and figure out what is necessary. I don’t expect the company heads to become experts in cyber insurance.”