By Mary Sams, Senior Research Analyst, Triple-I
Personal cyber risk – historically viewed as synonymous with “identity theft” – has evolved with the rise of internet-connected devices in the home. These devices can open the door to malware that can seize control of a homeowner’s data and expose them to extortion and other threats. Phishing and financial scams have been found to generate the greatest losses for homeowners.
Insurance for these perils exists, but adoption has not grown in line with the increasing peril. Triple-I and Hartford Steam Boiler (HSB) recently conducted research to better understand why and what insurers can do about it. The survey found that personal cyber insurance – while presenting a sales opportunity – involves educational challenges for agents and consumers.
Triple-I surveyed retail agents of homeowners insurance, since personal cyber coverage is commonly sold as an endorsement to homeowners’ policies. These agents are very knowledgeable of homeowners’ risks that can result in physical damage to property, as well as theft and liability coverages.
“Agents see the storm,” said Neil Rekhi, product manager for personal cyber insurance at HSB, “but homeowners can’t envision the damage until it’s too late.”
While 84 percent of agents surveyed said they recognize the value of personal cyber insurance, the survey found a notable gap between agents who feel comfortable selling it and those who don’t.
This hesitation is mirrored by consumer skepticism. The study found that 56 percent of agents report their customers either don’t understand or don’t agree with the value proposition of personal cyber insurance products.
“There’s a significant disconnect between agent perceptions of customer needs and actual customer perceptions of product value,” noted Dale Porfilio, Chief Insurance Officer at Triple-I.
Sales efforts remain robust, with 77 percent of agents having presented personal cyber insurance options to homeowners in the past month. However, consumer adoption rates continue to lag, highlighting a fundamental communication breakdown.
Closing the personal cyber protection gap will require a three-pronged approach: consumer education, agent/broker training, and a data-driven approach to product development,” says Triple-I CEO Sean Kevelighan.
Learn More:
FBI: Elder Fraud Up; Bolsters Case for Personal Cyber Insurance
U.S. Cyber Claims Surge While Global Rates Decline: Chubb
Digital Payment Growth Faces Rising Cybersecurity Threats: Chubb
Cyber Insurance Market Continues Rapid Growth as Risk Management Strategies Improve
Digital Tools Help Agency Revenues, But Cybercrime Concerns May Hamper Adoption
