Survey also shows main reasons why they consider or purchase cyber insurance
November 2020 | General Industries
BY CATHERINE RUDOW
42% of middle-market business owners reported that their business had experienced a cyberattack
63% of middle-market businesses that have experienced a cyberattack did not resume normal business operations for over a month
Only about half of agents (52%) say they talk to their customers often or always about cybersecurity threats
Each year, it seems as though more aspects of our daily lives move online. This is true not only in our personal lives, but also in our business dealings. In this interconnected world, it is increasingly imperative that businesses do everything in their power to protect their digital assets from cybercrime. This position has been further proven this year as COVID-19 drives more Americans to turn to virtual or digital business interactions, which provide cybercriminals with fertile hunting ground for new opportunities to exploit cyber weaknesses.
As 2021 approaches, it is essential for insurance agents to consider their role in cybersecurity and stay up to date on the latest trends in cyber insurance in order to provide sound advice to their clients. Doing so can help agents serve as trusted advisors, deliver value and be true risk management partners to their clients.
Trends within the cybersecurity and cyber insurance landscape were recently examined in Nationwide’s latest Agent Authority research, which surveyed 400 middle-market businesses and 400 independent insurance agents from across the country. In this article, we will examine key findings from that research and explain how independent agents such as you can leverage this information to meet the needs of your clients and prospects year round — not just during National Cybersecurity Awareness Month.
Before examining other cyber trends in the middle market, it is important to get the lay of the land. Nationwide’s research shows that middle-market businesses, which are typically more sophisticated operations, have a greater awareness and are more prepared for cyber threats than small businesses. Relative to their smaller counterparts, middle-market businesses have done a much better job of purchasing cyber insurance coverage. According to the Agent Authority research, 71% of middle-market businesses reported having some form of cyber insurance in place — versus just 17% of small businesses.
The survey results make it clear that many middle-market business owners appear to be more attuned to risks and are proactively preparing their defense. While this is encouraging news for the middle market, this still means more than a quarter of these businesses do not carry dedicated insurance protection for cyber incidents.
Trends to watch for in 2021
The Agent Authority research also examined a number of emerging trends, including deepfakes and the Internet of Things (IoT). Deepfakes refer to media — most often videos, but sometimes audio recordings — that have been created, modified or synthesized with the help of machine learning. The goal of deepfakes is to deceive viewers or listeners so that they will believe a false message. These videos or recordings have the potential to harm the reputation of a business or be used as part of extortion campaigns. Middle-market businesses are increasingly worrying about the potential harm of deepfakes.
Simply put, the IoT refers to a system of interrelated computing devices that are capable of communicating together to perform a task. IoT devices range from simple applications such as smart TVs all the way up to complex industrial systems. As more and more businesses utilize IoT devices, the related risks grow. In fact, 68% of middle-market business owners worry about an IoT device being hacked. This once again speaks to an opportunity for agents to provide counsel to their clients, as 72% of middle-market businesses trust their insurance agent to provide guidance on these devices and the insurance implications.
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