Triple-I: Personal cyber insurance consumer knowledge gap growing

By Isha Marathe

March 26 - (The Insurer) - While 84% of insurance agents understand the value of personal cyber insurance, only 43% believe their clients share the same understanding, a recent report from the Insurance Information Institute and HSB found.

The reasons for this gap may be a lack of consumer education on cyber insurance, but also a lack of proper training for insurance agents when it comes to selling cyber insurance.

Of the most pressing threats to their customers, insurance agents flagged identity theft/fraud, online fraud/scams, computer/device and malware attacks, extortion, and online harassment as the top concerns.

But despite presenting the coverage at what agents believe to be an attractive price, customer adoption remains low, the report said.

“As digital lifestyles evolve and become more interconnected, so do the risks,” said James Hajjar, chief product and risk officer for HSB, part of Munich Re.

“The pace of personal cyber threats is increasing at an accelerating rate, and personal cyber insurance is one way to protect against these increasing risks.”

THE AGENT-CONSUMER COMMUNICATION GAP

To agents, a significant majority of homeowners seem aware of cyber threats and understand that they can significantly impact their lives, but 56% reported that their customers do not understand or do not agree with the value of cyber insurance.

For example, 77% of agents have presented personal lines cyber insurance to clients at least once in the last month, but the report found that clients may not be purchasing the product at the same rate.

As per the report, 75% of consumers have had their personal information lost or stolen in some form of cybercrime, 28% had a social media account hacked, and 23% had personal information compromised in a data breach, while 14% of consumers experienced an online attack.

"The disconnect between the alarming rate of cybercrimes and the low adoption rate of personal cyber insurance is striking. This is a clear gap and an opportunity to help build awareness about personal cyber insurance, and I believe the insurance industry, including agent partners, can help amplify and tell that story more directly," Hajjar said.

Among clients who may be interested, 71% of agents report either pricing or breadth of coverage as the most important decision criteria, and more than 50% of agents said their clients would be willing to pay up to $100 for cyber coverage.

“This is a challenge of the unseen threats (where) insurance agents see the storm, but homeowners can’t envision the damage until it’s too late,” said Sean Kevelighan, CEO of Triple-I.

“Consumer education, agent training, and a compelling, data-driven approach to selling personal cyber insurance will be essential to driving customer adoption of the product.”

In spite of the importance of cyber insurance, the report found that most products are still relatively new, and a part of consumer lag might be because of a lack of awareness of the extent of the perils.