The business of insurance is one of risk management — of reducing risk, mitigating lossand making people and entities whole again.

|

Previously, all risks were traditional in nature. That changed,as the world continued to change. Two decades ago, there was anascent Internet that was largely undeveloped. In the succeeding 20years, it has grown, along with a level of interconnectedness ineveryday life that was previously unfathomable.

|

Related: Rethinking a digital approach toinsurance

|

As a result, a broad array of new risk is requiring us to startviewing the world from a cyber perspective. Being interconnectedmeans there's increased risk. One of the most important protectionsagainst any risk is insurance.

|

In 2016, the size of the global cyber insurance market wasvalued at $3.4 billion. But by 2023, it's expected to balloon to$16.9 billion, after seeing a compound annual growth rate of 20% inthe interim, according to a report by P&S Market Research.

|

In a recent report, Lloyd's of London said a global cyber attack could result in damages ofas much as $121.4 billion in an extreme event, comparable to theeconomic losses caused by Hurricane Katrina in 2005. But seriouscyber crimes that affect our clients happen all the time.

Smarter criminals

One reason that cyber crimes are increasing is that cyber criminals are becoming more sophisticatedand better organized. The stereotype of a cyber perpetrator beingan overweight thirtysomething still living in his parents' basementspending all of his time hacking into critical systems is no longeraccurate (if it ever was). Cyber crime today is big business.That's prompting individual cyber criminals to organize themselvesinto sophisticated international criminal cartels. The threat hasbeen globalized.

|

News reports of cyber attacks have focused on big eventsinvolving large corporations and public entities. This hascontributed to a lack of understanding on the part of many smalland midsized business owners and operators that they, too, cansuffer cyber-related losses. Small businesses are at risk — and notjust from data breaches.

|

Related: WannaCry and the dawn of large-scale businessinterruption

7 primary cyber exposures

PIA believes that small businesses have seven primary cyberexposures:

  • Fraudulent funds transfer.

  • Extortion and ransomware.

  • Social engineering.

  • Business interruption.

  • Data breach and privacy.

  • Network security.

  • Website media liability.

It is imperative that independent agents have the same level ofexpertise and competence about cyber that they have with otherareas of risk and insurance. Their clients expect it. That's whyPIA National joined together with our carrier council, The PIAPartnership, to unveil a new, comprehensive educational resource:Cyber 101, available to PIA members and agentsappointed by carriers participating in The PIA Partnership. Inaddition to the many educational resources available through theCyber 101 website, agents can use the website to access additionalcyber resources made available directly through these carriers.

|

Related: Cyber insurance claims: What happens when a breachoccurs

|

The twin trend lines of cyber threats and the need for cyberinsurance are headed in the same direction: up sharply. This isbeing driven by the inexorable spread of the Internet of Things(IoT). More devices with Wi-Fi capabilities will be relayinginformation over the Internet — including sensitive financial andpersonal data — and sharing that information with otherdevices.

|

As bad as they are now, cyber attacks are only likely toincrease, making it all the more important for independentinsurance agents to have the knowledge and the tools they need tohelp their clients protect themselves.

|

Current PIA Partnership companies include: Central InsuranceCompany, Encompass Insurance, Erie Insurance, Liberty MutualInsurance, MetLife Auto & Home, National General Insurance,Nationwide Independent, Progressive Insurance, Selective InsuranceGroup, State Auto Insurance Companies, The Hanover Insurance Group,The Hartford and The Motorists Insurance Group.

|

Mike Becker is executive vice president and CEO of the‎National Association of Professional Insurance Agents. He can bereached by sending email to [email protected].

|

The opinions expressed here are the writer'sown.

|

See also:

|

5 things to know about the NAIC's new cybersecuritymodel law

|

A game-changing play in cyber risk

Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader

  • All PropertyCasualty360.com news coverage, best practices, and in-depth analysis.
  • Educational webcasts, resources from industry leaders, and informative newsletters.
  • Other award-winning websites including BenefitsPRO.com and ThinkAdvisor.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.