Cyber

THE RISE OF PERSONAL CYBER

Cyber insurance has been limited to the commercial space for now, but it will soon expand to personal lines

By Adam Malik, Managing Editor

Personal cyber insurance is expected to be a big opportunity for brokers in 2021 as more insurers introduce the product to the marketplace.

“We’re seeing the idea of personal cyber catching on quickly,” says Matt Cullina, managing director of global markets at CyberScout.

This is thanks in part to Canadians’ increased reliance on technology as a result of the COVID-19 pandemic. To prevent the spread of the virus, people are working from home, ordering groceries online, learning virtually, and connecting with family and friends through video messaging applications. “It’s like we’re tethered to WiFi,” Cullina says.

In personal lines, the industry has been slow to bring a cyber product to market, observes Bill Gatewood, national personal insurance practice leader at Burns & Wilcox. “Honestly, it’s something that I’ve been concerned about for probably the last three to four years because there’s such a rise in people’s information being compromised.”

Considering how many breaches have affected governments and large companies alike, it’s naïve for anyone to believe their information hasn’t been compromised, Gatewood says. “And I don’t think that’s overstating it. I don’t think that’s insurance scare-tactic hyperbole. I just think it’s a fact.”

In what Cullina called a “weird” twist, Canada is actually leading the way in introducing cyber to personal lines. “Usually, the U.S. is [first],” he says. But Canada is “the first movers in that type of cyber market.”

He predicts Canadians will see the big insurers introduce cyber solutions to personal lines products as an add-on. “You’ll see at least one, if not two, national writers launch a personal cyber solution in 2021,” Cullina says. “I think for most insurance markets, once the first couple of folks do it, everybody else wants to jump on the bandwagon.”

Personal lines cyber will provide a much broader solution than other existing products, such as identity theft solutions, which have been around for some time, Cullina says.

Gatewood agrees. “We’ve had some traditional identity theft coverage in fairly small and low limits and it’s really not all that sophisticated. Some fairly generic, small-limit ransomware coverage has been available for people.”

What will the expected uptake be like? If commercial cyber is any indication, it might be slow. “That took a while to convince business owners to purchase cyber insurance,” Gatewood says.

Sales will probably mimic a hockey stick, he predicts. ”I think it’s going to go slowly, then it’ll get to a point where the trend line will start to shoot. Because we have to create that awareness, we have to explain to people what they have at risk. You have to convince them that there’s real value in it.”

Cullina figures there will be a heavy marketing component involved. “And hopefully, you’re going to start seeing some strong adoption of those types of solutions as well.”