The number of US firms without any cyber insurance is dropping, from 50% last year to 24% in 2018, according to a recent survey from analytics firm FICO. Nonetheless, whether they’re buying insurance or not, small and medium-sized businesses (SMBs) are increasingly becoming targets for cyber criminals because of specific vulnerabilities that larger corporations might not have.
“First, SMBs are facing higher costs as a result of sophisticated and dynamic threats such as ransomware and fraudulent wire attacks. Second, SMBs consume high amounts of data and are reliant on the interconnectivity of systems and technologies necessary for them to operate, so this makes them increasingly more vulnerable,” said Lauren Tennant Pollock, Accelerate partner, an internal innovation team at AXA XL, a division of AXA.
“Given their annual revenue and turnover size, SMBs also have less money to invest in sophisticated prevention and detection services, such as anti-virus malware protection, as well as hire key personnel needed to design and deliver appropriate cyber resilience strategy, and this also includes employee training.”
In light of those qualities, SMBs are considered to not only have a high but actually disproportionate amount of risk when it comes to cyber, Pollock told Insurance Business. To make it easier for SMBs to buy cyber insurance, AXA XL recently partnered with Slice Labs to create the first cloud-based, on-demand cyber insurance solution in the US aimed at market segment, which offers digital end-to-end capabilities, from purchasing a policy to handling claims. AXA XL brings its product and pricing expertise to the partnership, and will also provide education and risk management tools to businesses through the platform.
One unique feature of the offering is that at the time of binding, the client can receive a cyber health check, which gives an overview of that company’s risk posture and will hopefully create more awareness about their exposures, explained Pollock.
On their end, brokers and agents can help close the cyber insurance gap further, especially as SMBs are often harder to convince about the need for cyber insurance.
“Cyber has been a very complex risk, and there’s actually many types of security service providers that are well suited to understanding a company’s cyber position and therefore may be able to offer a cyber insurance product in the future,” said Pollock.
“One thing that brokers and agents can do today is definitely team up much more closely with insurers, data and analytics companies, and cyber security vendors in this space in order to better understand a company’s cyber security posture. This will enable them to be able to recommend a unique solution for that individual company’s needs. A lot of the messaging is more around education and being able to provide that tailored risk awareness to a customer.”
