4 Things Agents Need to Know About Small Commercial Cyber Insurance

by: By: Liberty Mutual Insurance

Can you think of a small business that doesn’t use email? What about a small business that doesn’t use the internet? While cybercrime has traditionally been considered more of a concern for larger organizations, that trend has shifted quickly. According to digital security solutions provider Barracuda Networks, small businesses are now three times more likely than large organizations to be targeted by cybercriminals.

This presents a major opportunity for independent agents to help ensure their clients are protected from this growing threat. Here are four things agents need to know about small commercial cyber insurance:

Demand has skyrocketed

There’s been a longstanding demand for insurance products that address cyber risk in the commercial space, but things have reached a tipping point. Businesses of all sizes and from all industries are managing and relying on more data than ever before, resulting in heightened levels of risk exposure. Ransomware attacks in particular continue to skyrocket — according to a 2021 report by Verizon, they nearly doubled in frequency in 2021. This has hiked up demand for cyber insurance products among small businesses and independent agents alike.

Business cyber coverage is different from personal cyber coverage

While it can feel like there’s a gray area between business and personal cyber coverage, especially when it comes to working from home, there’s typically a clear distinction between the two. Generally, cyber losses incurred during the course of doing business can be covered by a business cyber policy or endorsement. That extends to any breaches that may occur while an employee is using a personal device or working from home. However, while business losses associated with a personal device could be covered as part of the business cyber policy or endorsement, any loss to the personal device itself would not.

Social engineering attacks are on the rise

Social engineering attacks, like targeted ransomware and misdirected payment fraud, have seen a big uptick in recent years, so it’s important that agents carefully review those types of risks with their clients and encourage them to carry adequate protection. The good news is, cyber endorsements have become more comprehensive in addressing these emerging risks. In the past, coverage for misdirected payments might only kick in if a hacker directly changed the routing or wire transfer information on a payment, but now it can cover voluntary separation payments made by employees if they were manipulated by a hacker. Many cyber coverages offer clients more value than before and are well worth the investment.

Cybersecurity presents opportunity for agents

While many responsible business leaders are aware of growing threats in the cybersecurity space, some are still missing crucial information. According to a 2022 survey by CNBC,  small business owners are overly confident about their cybersecurity preparedness. While 6 in 10 small business owners indicated they are very or somewhat confident they could quickly resolve a cyberattack, less than half have taken basic cybersecurity steps like installing antivirus or malware software, strengthening their passwords or backing up files on an external hard drive. And the repercussions could be very serious, with 60% of small businesses that experience a cyberattack closing within a year.  

Agents have a unique opportunity to step into their role as a trusted advisor and help educate clients about these critical risks. When agents look for ways to make the risk real and the coverage approachable, they help clients understand the need without getting overwhelmed by the breadth of information and options.

The future of cyber insurance

Cyber threats are not going away. They impact all insureds, small and large, and bad actors will continue to think of new ways to disrupt business and make money. It’s critical that agents discuss cyber risk with their clients early and often. Peace of mind is invaluable, and today’s cyber insurance options are designed with that in mind. New cost-efficient endorsements like the Liberty Mutual cyber product offer a great way to provide protection while delivering added value through monitoring and training.