In part one of WRIN.tv ‘s interview with Rick Betterley, the editor of the Betterley Report discussed the exposures small and medium-sized companies (SMEs) have to cyber-attacks. In part two he looks at the market dynamics at work for SME cyber coverage.
There is a lot of cyber insurance available at reasonable prices, according to Mr. Betterley. “Most cyber insurance is bought as a standalone policy…(or) through add-on to a policy that an SME is already buying”, such as a: BOP (Business Owners) policy, a professional liability policy or a technology E&O policy. Mr. Betterley warns SMEs to “be careful that the quality of the coverage is sufficient as coverage could be thinned out due to price, or the limits (could be) inadequate.
Mr. Betterley did not believe cost is a major factor in SMEs decision to purchase cyber insurance, but communication by the brokers is a “major impediment.” Mr. Betterley says brokers have “a hard time communicating what’s covered…how it’s covered.” This can affect the confidence of the insured, particularly given the technical nature of the coverage.
While there is potential to sell cyber insurance to SMEs, market penetration is very low, raising questions about profitably. “If hacking is as pervasive as it seems to be, how are insurance policies going to cover a high frequency event at a relatively low-cost?” According to Mr. Betterley, “that it is going to be difficult.”
Many cyber insurance policies come with value added risk management services that help the insured be more secure. Mr. Betterley believes, if these benefits are not included, it will be tough to meet the growth opportunity cyber insurance offers in the SME market.