Brokers are “slowly” realising cyber insurance’s growth potential, as take-up remains low despite clients’ rising concern at the risk.

According to specialist insurer CFC’s recent survey, Australian SMEs rank cyber as their number one business risk – well ahead of fire, loss of staff or regulatory issues. 

“Cyber is by and large what keeps them awake at night,” head of global cyber development Lindsey Maher told insuranceNEWS.com.au. 

“But there’s still a disconnect between them thinking it’s their biggest business risk and them actually purchasing cyber insurance.” 

CFC estimates only 10%-15% of Australian SMEs buy standalone cover. 

Many brokers have traditionally not prioritised cyber, and “there’s clearly an education gap”, but that is changing. 

“One of the other survey results was 30% of Australian businesses want their brokers to actually talk to them about cyber insurance,” Ms Maher said. 

“Brokers haven’t always prioritised cyber … they’re clearly being pulled in different directions. And I don’t think insurers have necessarily always made cyber easy to sell by way of long question sets that aren’t proportionate to the client’s revenue size. 

“I think brokers are very slowly switching on to [the fact that] if they’re not talking to their client about cyber, somebody else is going to.  

“And we’ve seen a lot of brokers land the entire insurance program [with a new client] because they led with cyber, and cyber drove the program for the rest of the business. So while their intent was just to go and sell them cyber, they ended up getting all their other product lines. 

“The softening across other product lines, especially in the Australian market, means brokers need to look for more organic growth opportunities. And cyber is one of the best organic growth opportunities for brokers because it’s a completely new revenue stream.” 

Ms Maher says the cyber market is also “incredibly soft” and pricing reductions “can only go on for so long”. 

But she adds the high levels of competition help lift awareness.

“It’s the most competitive trading environment we’ve seen in the Australian market in our 25-year history of writing cyber in Australia, and we wrote our first policy here in 2001,” she said.

“There’s a lot more competition than there ever was before. We think that’s only a good thing for the market because the more people talking about cyber insurance, the more the market is going to grow with that.”