Addressing Cyber Threats & Preventing Loss with Cyber Security Insurance

As an insurance agent, you probably already know the importance of having a good cyber insurance policy to protect your business in case of a data, privacy, or network breach. However, you need to ask yourself if your clients fully comprehend how cyber insurance can protect them and if you’re doing enough to inform them.

The last time we talked about cyber threats/insurance, the cyber security insurance market was projected at $14.5 billion by 2022. According to Allied Market Research, the market is now projected to reach $28.6 billion by 2026.

Insurance providers are continually adapting to the cyber security threats around us. By offering innovative products for small to mid-sized businesses under the threat of cybercriminal behavior.

Cyber insurance represents some of the most lucrative commercial policies in the industry. Just ten policies a year could mean a month’s income for an independent insurance agent. As the number of cyber-attacks against businesses continues to rise, the government continues to craft legislation to catch up. Meanwhile, your clients stand to risk significant losses. Losses can include intellectual property loss, loss of reputation, and, of course, financial loss.

Independent insurance agents would be wise to educate themselves about who can benefit from cyber liability coverage and how cyber insurance can help minimize the risks of doing business in this modern world. It is a world where hacking and cyber-attacks have become so commonplace that most people have become desensitized to the issue.

Let’s take a closer look at the risks associated with growing threats, what they can do to your clients, and how you can both benefit from commercial cyber insurance policies.

Reputational damage after a data breach can affect customer perception of your client’s business.

The fallout that a company endures following a data breach can be overwhelming. While the financial losses and leak of sensitive, critical data often steal the show in the conversations of the aftermath, what often goes unnoticed until it is too late is the reputational damage that the company can suffer.

For most businesses, brand image and reputation are everything, and a single data breach could make or break a company’s reputation. A data breach often results in a customer base that becomes skeptical about the company’s ability to not only protect their interests following the breach but long into the future. In other words, a data breach breeds mistrust.

In the event of a data breach, a business can mitigate this kind of reputational damage by using a PR firm or a crisis communications expert. It can offer credit monitoring services to its customers free of charge and hire an electronic forensic team to figure out what happened and how to prevent a breach in the future.

Of course, all these services cost money, and that’s where cyber insurance comes in. Depending on their chosen policy, cyber security insurance can help cover some of these costs and help them to regain customer trust.

Cybercrime is big business, and the financial loss for victims can be unfathomable.

The cost of cybercrimes isn’t limited to data vulnerability, and cyber-attacks lose businesses billions of dollars annually. Cybercrimes cost the United States $6.9 Billion in 2021, according to the Federal Bureau of Investigation’s 2021 Internet Crime Report, and Trellix estimates that cybercrimes cost the world’s economy over $1 Trillion, which is about one percent of the global GDP. That begs the question, how much will a cybercrime against your client cost them?

Companies serving a large customer base would be wise to invest in cyber insurance just as they would in any other form of business insurance to better serve and protect their customers. By helping pay for unrecoverable costs related to a cyber-attack, cyber security insurance can mean the difference between surviving the attack or closing shop for most small to mid-sized businesses.

Most people fail to recognize the threat that cybercriminals pose to intellectual property.

When most people think about cyber security threats and cyber-attacks on businesses, they immediately think about data breaches, where customer information is stolen to be used for nefarious purposes. While data theft will certainly be a legitimate concern for many of your clients, you may encounter some who have another reason to worry about cyber security: intellectual property theft.

Intellectual property theft is the theft of any trade secrets or copyrighted materials. Theft of trade secrets usually affects those in the tech, financial, and manufacturing sectors. Examples of trade secrets that could be stolen in a cyber-attack include technologies, methodologies, plans, ideas, or any other sensitive company information. The theft of a company’s trade secrets can damage its competitive edge and hurt a business economically.

Most general cyber insurance policies will not cover loss of value resulting from the theft of a policyholder’s intellectual property. If this is something your client desires or your client’s intellectual property is at risk, consider helping them find a policy that addresses intellectual property losses.

How independent insurance agents can benefit from selling cyber security commercial policies.

There continues to be heightened awareness regarding cyber security and privacy, with governments worldwide quickly adopting new regulations to protect consumers. As new rules are enacted, more small to mid-sized businesses are compelled to look at their own cyber security more closely. With that in mind, there has never been a better time for agents to purchase their own cyber insurance and start selling it to their existing policyholders. ASNOA agents have access to hundreds of carrier opportunities and appointments, making selling cyber security insurance simple.

The cyber security insurance market remains largely untapped, providing agents with a unique opportunity to gain revenue while offering protection and becoming trusted cyber security advisors to their existing clients.

When you can educate clients about how cyber security insurance is protecting your business and how it can help them to avoid reputational damage, financial loss, and intellectual property threats from cyber-attacks, they’ll quickly recognize the benefits. You’ll be on your way to tapping into a still niche market where you can generate significant long-term revenue.

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