According to a survey published by FWD Research in Q1 2024, 35% of commercial lines insurance brokers have not written any cyber insurance in the past 12 months but 15% write more than 15 policies per year. This suggests there is confusion in the market where some brokers are recognising the growing needs of SME clients for this kind of cover, but over a third either do not recognise the need or are uncomfortable recommending it.
Interestingly, provincial firms (outside of the top 250, with 1 to 2 offices) write more cyber cover than larger firms with 16% writing more than 15 policies per year compared with 12% of regional brokers (top 51 – 250).
Most brokers are using specialist cyber policies, but a significant minority write the cover into more general policies. Of these, provincial brokers are significantly more likely to include it under a commercial combined policy, with 13% doing so compared to 8 – 9% of larger broking firms.
Further evidence of confusion can be found when we asked the brokers about the wording within the policies. While a third felt it was ‘about right’, one in five felt it was too tight, rising to a quarter in regional firms (top 51 – 250) but 37% couldn’t answer the question. This figure rises to 42% of small provincial firms.
Head of research at FWD Research Julian Green, said: “With small provincial firms writing more cyber risk than firms in the Top 250, it is interesting to shine a light on the type of policies they are using. FWD’s Broking Now! omnibus research highlights that these firms are more likely to use commercial combined policies.
“However, these smaller firms, often with only one or two offices appear less comfortable about the strength of wording used within cyber policies than larger firms. There is clearly strong demand but are they best serving their clients with these policies?”
When asked about the likelihood of the FCA taking action to encourage better wording, three in ten found it likely within the next 6 months, with smaller brokers more likely than larger firms anticipating regulatory action.
According to an article published in Insurance Age: https://www.insuranceage.co.uk/insurer/7954501/has-cyber-reached-a-tipping-point-with-new-entrants-and-incumbent-product-pushes
Alex Jomaa, chief underwriting officer of cyber provider Onda, was quoted as saying: “Whilst it depends on the provider the most comprehensive coverage will come from the stand-alone market. Brokers should ensure they have assessed demands and needs of clients to ensure they are making the most appropriate recommendations.
“There is more to cyber insurance than the risk transfer, and many package policies do not afford customers the insights and other benefits that technology brings such as continuous monitoring of risk throughout the policy period.”
