Canadian businesses may be falling behind in cyber awareness, according to a recent poll by the Insurance Bureau of Canada (IBC), but CFC has discovered that Canadian clients are the most interested in cyber extensions compared to clients in any other country where the product is provided.
Nearly one-third of CFC’s Canadian professionals were already using the cyber extension before last month’s upgrade, with many of those clients purchasing cyber coverage for the first time. According to the CFC, the level of interest has been significantly higher than in other countries like the US, Australia, and the UK.
According to the IBC, there is a lack of awareness among Canadian small businesses regarding cyber insurance, as only 20% have expressed plans to get coverage in the coming year.
The head of professions and healthcare at CFC, Tim Boyce (pictured), explained to Insurance Business that there are a few reasons why cyber insurance has not been more popular among small and medium-sized enterprises (SMEs) in Canada. “The fact that there have been so many attacks is a contributing factor, but many cyber policies, whether they come as a package, stand alone, or supplement, still don’t provide enough protection for the risks and exposures that customers are dealing with.”
Cyber insurance in Canada is falling short in several areas, according to CFC’s Boyce
A CFC claims research found that among Canadian industries, healthcare and professionals are the most susceptible to cyber disasters.
Data breaches, financial theft, and ransomware assaults account for about 55% of CFC’s cyber claims, but according to Boyce, there may be a lack of market coverage in certain sectors.
When Boyce reviewed various insurance policy forms, he noticed that most of them had sublimits or didn’t provide coverage in some areas. “So maybe it’s a sign of customers purchasing an insurance policy only to discover that it’s meaningless because it doesn’t provide any real protection.”
Even today, many SMBs ignore the need for cyber insurance (IBC and CFC)
Among the 305 company heads and decision-makers polled for the IBC 2023 Cyber Security Survey, 60% expressed the belief that their company was too small to attract the attention of cybercriminals.
According to Boyce, one of the most prevalent objections that CFC receives from small firms is the belief that they are not vulnerable enough to cyberattacks.
“They believe they are insufficiently large, which is, in my opinion, not true because the vast majority of those groups will own a laptop or a bank account,” Boyce remarked. “They’ll be opening themselves up to phishing attempts because they’ll be sending money to third parties or sending invoices out.”
Cyber insurance mistakes in the past provide a difficult situation
The cover’s past reactions to cyber events suggest it may be wary of opening up.
In the early days of cyber, brokers faced the challenge of suggesting cyber protection to their customers that didn’t extend to all risks and exposures. This was due to the constantly changing threat landscape, according to Boyce. “Those trends are now behind us by a long shot.”
Why is CFC more successful than average in enticing clients to get cyber insurance?
Despite the alarming picture the IBC data painted regarding the cyber risk and inaction of small businesses in Canada, cyber insurance has been a boon for CFC’s professional services clients.
Nearly 40% of CFC professions clients, including consultants, recruiters, contractors, and others from other industries, purchase cyber insurance as part of a package policy. Among this group, 80% are purchasing cyber insurance for the first time.
The IBC poll results are at odds with our actual take-up rate, which is “increasing quite considerably year on year as well,” as Boyce put it.
A “core reason” driving higher proportional cyber cover take-up in Canada inside CFC’s book, according to Boyce, is brokers taking the initiative to educate clients around cyber insurance.
A more varied mix of industries and spending levels compared to other nations could also play a role.
However, cyber vulnerabilities are a “global issue,” according to Boyce of the CFC.
“The threat of ransomware is very prevalent,” Boyce stated, describing the problem as a “resounding issue” across all jurisdictions. “From a severity standpoint, it accounts for 77% of our claims from professions, even though it only accounts for 17% of all claims by frequency.”
When asked about ways to combat the lack of activity in small business cyber insurance, Boyce suggested making the coverage more welcoming and beneficial to prospective customers. It has been easier for clients who already have a policy to get a cyber add-on quotation, and CFC has upgraded its cover to include access to its proactive threat intelligence technologies, which flag up weaknesses and potential compromises.
