Brokers are will be opening themselves up to professional indemnity claims if they fail to sell their clients cyber cover, says a leading specialist broker.
On Monday afternoon, Aon Client Manager Eric Lowenstein chaired a NIBA Convention panel discussion devoted to the rising risk of losses from cyber crime.
He says within a few years cyber insurance will be as standard a product as property or public liability.
“When brokers are sitting around talking to their clients about their insurance needs cyber liability is something they should be discussing now but in 10 years time if they are failing to do that they will be opening themselves up to E&O exposure,” he says.
“It’s something that many organisations have much greater exposure to than other risks.
“If you look at a lot of industries, the risk of a cyber incident is around 12%. The risk of a building burning down is less than 0.5%.”
Lowenstein says a key tool in a broker’s arsenal when dealing with cyber products is relevant case studies.
“A lot of clients we speak to really fail to grasp the gravity of the exposure and what the risks really are,” he says.
“Very often the industry sector they are in has faced a breach in the past and when you tell them the story of that it resonates with them.
“That’s when they start to understand the risk.”
Once clients understand the risks, brokers can help devise a program to deal with those risks, Lowenstein says. He says a top-down approach is best.
“It’s not just an IT issue anymore,” he says.
“It is something that is significantly broadened and that something is part of directors and officers’ responsibilities.
“You really need to ensure you are engaging people in legal, in marketing, in HR, comms and the IT team. It’s a firm-wide approach and having buy-in from board level is the first step to an organization moving in the right direction.”