Insurers and brokers face a significant challenge in persuading small and medium-sized enterprises (SMEs) to secure cyber insurance coverage despite being prime targets for cyberattacks, statistics from the Insurance Council of Australia reveal. With less than 20% of SMEs currently holding cyber insurance, despite bearing the brunt of approximately 40% of all cyber assaults, the industry is actively seeking ways to bridge this gap.
In a recent move aimed at addressing this issue, Insurance Australia Group (IAG) unveiled Cylo, its inaugural cyber underwriting agency, under the umbrella of CGU, the insurer’s broker-facing division. Damien Gallagher, Executive General Manager of CGU, emphasized Cylo’s primary focus on catering to the needs of SMEs. “Establishing an agency is more about the specialization that’s required to really service this risk,” Gallagher explained, highlighting the agency’s role in supporting smaller business customers.
Cylo’s approach revolves around addressing three fundamental types of cyber risks that businesses encounter: risk transfer through insurance coverage provided by CGU, proactive risk mitigation facilitated by cyber security firm UpGuard, and comprehensive incident response and claims management overseen by Crawford & Company, Cylo’s partners.
Gallagher underscored the dedication of CGU’s Cylo team, comprising seven specialized employees, with broader support available across the firm. He emphasized that the agency operates as a distinct entity within CGU’s underwriting division, Intermediate Insurance Australia (IIA), with a dedicated team committed to serving brokers and their clients.
Educating SME customers about cyber risks and empowering brokers to advise them effectively are paramount objectives for Cylo. Gallagher stressed the importance of ensuring that small business owners understand they are not alone in dealing with cyber threats and that tailored solutions are available to support them.
In parallel efforts to bolster cyber insurance offerings, some brokers, like Adelaide-based Andrew Brett, have taken proactive steps to enhance their cyber expertise. Brett’s firm, Infosure Insurance, stands out as a dedicated cyber insurance brokerage offering comprehensive IT solutions, cyber auditing, and cyber insurance coverage.
Brett noted significant shifts in the Australian cyber insurance landscape, attributing them partly to the government’s cyber and regulatory initiatives. However, despite increased awareness and technical preparedness among SMEs, Brett highlighted the persistent challenge of low uptake of cyber insurance, citing a lack of understanding regarding its holistic value among business owners.
Meanwhile, other industry stakeholders are ramping up their cyber resources to tackle evolving cyber threats and regulatory landscapes. International law firm Clyde & Co recently expanded its cyber practice in Australia, appointing five new special counsels, three of whom will specialize in cyber breach response. Stefanie Luhrs, Partner at Clyde & Co’s cyber practice, emphasized the growing regulatory and claims risks associated with cyber incidents, necessitating proactive measures to mitigate potential fallout.
In conclusion, while the cyber insurance industry strives to enhance its offerings and educate SMEs about cyber risks, persistent challenges remain in fostering greater adoption of cyber insurance among small businesses. As cyber threats continue to evolve, proactive measures and tailored solutions will be essential in safeguarding businesses against potential cyber risks and mitigating the impacts of cyber incidents.
