Despite a large number of consumers being routinely victims of cybercrime, most of them do not have personal cyber insurance, according to a recent report by the Insurance Information Institute (Triple-I) and HSB.
The Addressing the Personal Cyber Protection Gap report captures the results of their recent survey of insurance agents to gain a deeper understanding of their perceptions of personal cyber insurance products.
“As digital lifestyles evolve and become more interconnected, so do the risks,” said James Hajjar, chief product and risk officer for HSB, part of Munich Re. “The pace of personal cyber threats is increasing at an accelerating rate, and personal cyber insurance is one way to protect against these increasing risks.”
The most pressing threats reported by customers to their insurance agents were: Identity theft/fraud, online fraud/scams, and computer/device and malware attacks, followed by extortion and online harassment.
Cybercrime has impacted a large number of consumers, with three-quarters having their personal information lost or stolen. This includes 28% who have had a social media account hacked, 23% who have had their personal information compromised in a data breach, and 14% who have experienced an online attack.
Yet 56% of insurance agents reported that their customers do not understand or agree with the value of cyber insurance.
Agents have concluded that personal cyber insurance has become a growing insurance gap, mainly between their understanding of the value of cyber insurance and that of their customers.
While presenting the coverage at what they believe to be an attractive price, customer adoption remains low, the study revealed.
Key findings of the survey reveal that 84% of agents understand the value of personal cyber insurance, but only 43% believe their clients share the same understanding.
While most homeowners appear to be aware of cyber threats and their potential serious consequences, 56% of agents say their clients do not understand or do not agree with the value of cyber insurance.
77% of agents have presented personal lines cyber insurance to clients at least once in the last month, yet data suggests that clients may not be purchasing the product at the same rate.
Additionally, 71% of agents report either pricing or breadth of coverage as the most important decision criteria for their clients purchasing personal cyber insurance. And over 50% believe clients would be willing to pay up to $100 for this important coverage.
“This is a challenge of the unseen threats – insurance agents see the storm, but homeowners can’t envision the damage until it’s too late,” said Sean Kevelighan, CEO, Triple-I. “Consumer education, agent training and a compelling, data-driven approach to selling personal cyber insurance will be essential to driving customer adoption of the product.”
Additionally, Hajjar said: “The disconnect between the alarming rate of cybercrimes and the low adoption rate of personal cyber insurance is striking. This is a clear gap and an opportunity to help build awareness about personal cyber insurance and I believe the insurance industry, including agent partners, can help amplify and tell that story more directly.”
The report states that personal cyber coverage is too new and different a product from home and property insurance for agents to fully understand and convey its value to policyholders.
Dale Porfilio, FCAS, MAAA, chief insurance officer, Triple-I, noted that the disconnect between agent/broker and consumer perceptions of personal cyber risk – and the role of insurance in addressing it – “is a call to action from insurance professionals to provide greater understanding of the perils to consumers to drive product acceptance.”
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