You’ve probably seen the photo of a neighborhood decimated by fire. Among dozens of high-value homes destroyed, one remains unharmed thanks to the fire retardant foam sprayed by a homeowner’s insurance company. While the fire itself may not be preventable, agents understand that the insurance product and policy plays an important role in limiting the damage.
However, that same focus on risk management is not currently being applied when it comes to the growing threat from cyber-attacks. Although written cyber premiums have increased greatly over the past several years, we find that many clients still do not have proper protection.
It’s astounding that many business owners simply do not see cyber and privacy risks as a threat to their operations.
Consider that we have already surpassed the 85.6 million compromised records in 2014…within the first three months of 2015. Further, more than half of the businesses that were breached in the last year had fewer than 250 employees.
We find that the lack of perceived value in purchasing cyber liability coverage is directly correlated to the inability of brokers and agents to properly explain the benefits and resources offered within these policies.
Recently, we hosted a cyber-liability summit in Chicago in partnership with the Association of Lloyd’s Brokers. More than 300 insurance professionals joined us for a discussion with representatives from Kroll, a corporate investigation and risk consulting firm, and the Illinois Attorney General’s office. Together we discussed the growing risk of reputational and financial ruin from cyber-attacks.
Greater education is clearly the solution. We must also work to evolve today’s cyber liability policies so they offer even greater value to clients before their businesses are affected by a breach.
At Burns & Wilcox, we believe in building a better cyber product that combines proactive risk management with a traditional cyber liability policy. We are forging partnerships with renowned cyber security experts and exploring how penetration testing and an advanced warning system could mitigate the risk from the most catastrophic of breaches. And we are working with insurance companies to identify premium discounts for the clients that take these steps to ensure they have stronger security in place.
Working together, we can bring resources to the table that will strengthen an organization and better prepare them for when a data breach strikes.
Just like our example with the raging wildfire, no cyber breach is completely preventable. But, the right risk mitigation strategy can prevent the breach from burning your client.
David Derigiotis, Corporate Vice President, leads the professional liability center of excellence at Burns & Wilcox, the largest independent wholesaler in North America. David has been interviewed by the Wall Street Journal and appeared on the Fox Business Network and CNBC, along with dozens of other insurance outlets. He also regularly teaches continuing education courses on professional, cyber and privacy liability to brokers and agents nationwide.