Cyber insurance and high-net-worth clients

The Risk

Cyber risk for SMEs and large organisations has been increasing for many years. A UK government report in April 2017 clearly demonstrated the threat, with nearly half (46%) of all UK businesses suffering a cyber breach or attack in the previous 12 months. Over that period, the average cost of a breach to large businesses was £20,000.

In 2018, trends were examined in the personal market as there was growing interest from brokers and agents. The conclusion was that high-net-worth families and individuals take on commercial-type exposures when it comes to cyber risk.

High Profile Cases

David Beckham was targeted through his PR agency, which was hacked by a group seeking a £1 million ransom in a ‘cyber’ blackmail attempt. It was reported that approximately 18.6 million messages and documents were stolen. Beckham and his team refused to pay the ransom and the resultant publication of numerous private email messages between Beckham and his PR agency has, according to some, left his and “Brand Beckham’s” reputation significantly damaged.

High levels of wealth, multiple assets and public profiles all contribute to the vulnerability of these targets, with personal staff and security teams providing several points of potential access for unscrupulous hackers.

While this is an extreme case of a celebrity being targeted, over the past decade the problem has become part of our online existence with phones, laptops and tablets providing an open window into our bank accounts and daily lives. Clearly, those with more assets face a greater risk.

Support for Brokers

This year, DAS UK Group and HSB commissioned research into the growing threat of cyber risk and the levels of understanding among consumers, insurers and brokers. The broker community summed these up in a number of key points:

• Cyber insurance is here to stay. The market appears to be developing rapidly with 58% of brokers surveyed expecting it to “grow a lot” in the next two years.

• Brokers are also aware of the burgeoning importance of cyber insurance with 56% rating the online threat as either the most important, or among the most important, of growing insurance risks faced by SMEs and consumers.

• Brokers have been swift to take advantage of this developing new market with cyber insurance products for businesses being sold by over two-thirds of those who responded. The consumer market, however, is still in its infancy, with just 13% of brokers selling similar products for the general public.

• Only 8% of brokers understand cyber risk and cyber insurance ‘very well’.

• 56% of brokers believe cyber risk is one of the most important risks consumers will face over the next two years.