What did middle market senior executives think about product features that are often found in Cyber Risk and Privacy insurance policies?
Here’s an overview (the full Report includes 27 charts that provide substantially more information and greater detail, as well as our interpretation of the implication of the responses).
In this section we asked executives responsible for insurance at middle market companies about specific product features. We asked a number of detailed questions about the types of products that the respondents were interested in, the specific product features and how they ranked them, and the value of the various risk avoidance and loss mitigation services that often are an integral part of a cyber policy.
Respondents were quite interested in buying coverage as a part of their existing Commercial General Liability or similar policy. We don’t think that this is realistic; standalone cyber coverage will still dominate the market for this group of insureds.
We asked about the Two Most Important Coverages in a cyber policy; there were clear distinctions between the insureds and those not yet covered. The uninsured did not see Fines and Penalties coverage as being as important as did those that already have coverage. This may be a function of product knowledge; the uninsured are not as knowledgeable as the insureds.
Policies that include services to help avoid losses and those that minimize losses that still occur were very attractive, especially to those not yet insured. This indicates that the availability of services could be a strong but underutilized selling point. Brokers should make more of an effort to educate their prospects about the availability and value of these services in cyber policies.
Cost was important but coverage quality ranked high for many companies. There was a clear distinction amongst companies, where cost was the most important factor for many, and for others, it was coverage quality. Marketing coverage quality to this group should pay dividends.
Most insureds bought coverage from their existing brokers, and most of the prospective insureds expect to as well. At the same time, respondents did not place much emphasis on the broker’s product knowledge, which indicates that brokers with specialized knowledge might do well in this market. Insurers could do more to support the expertise of their brokers.
Existing insureds reported that they would be willing to pay higher premiums if their primary coverage objectives were included in the cyber policy; fewer prospects agreed. Interesting, as it implies there is a market for high quality coverages if the insured or prospective insured understands that they are included.