EDITORIAL

New survey reveals top five reasons middle-market businesses go without cyber insurance

Survey also shows main reasons why they consider or purchase cyber insurance

November 2020 | General Industries

BY CATHERINE RUDOW

KEY HIGHLIGHTS

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42% of middle-market business owners reported that their business had experienced a cyberattack

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63% of middle-market businesses that have experienced a cyberattack did not resume normal business operations for over a month

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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.


Where middle-market businesses stand


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.


71%

of middle-market businesses reported having some form of cyber insurance in place

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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.


Concerns business owners have about deepfakes:

  • 52% — It could lead to extortion attempts against my business
  • 51% — It could damage my business’s reputation
  • 51% — It could be used to undermine my company’s customer relationships
  • 47% — It could lead to fraudulent transfers of funds
  • 45% — It could be used to impact sales by spreading false information

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.

key takeaway light bulb icon

KEY TAKEAWAYS

Nationwide’s Agent Authority study surveyed 400 middle-market businesses and 400 independent insurance agents from across the country

The survey found that middle-market businesses have a greater awareness and are more prepared for cyber threats than small businesses

But more than a quarter of middle-market businesses still do not carry dedicated insurance protection for cyber incidents, and only about half of agents say they talk to their customers often or always about cybersecurity threats

TAKE THE NEXT STEP


Learn more about Nationwide’s cyber survey, cyber insurance and cyber resources. If you're an agent interested in growing your commercial book of business, please go to nationwide.com/agents.


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about the expert

Catherine Rudow, Vice President of Cyber Insurance

Catherine Rudow headshot

Catherine works with many departments within Nationwide to expand cyber insurance offerings to meet the needs ... of its members. Her in-depth knowledge of cyber risk also extends to developing strategies for noncyber traditional lines of business that are exposed to technology and the internet.

Catherine has over 25 years of experience in the reinsurance industry covering a wide range of casualty lines of business. Prior to joining Nationwide, Catherine worked at PartnerRe as a senior-level underwriter, where she built the cyber insurance portfolio and branded PartnerRe as a lead reinsurance market for cyber insurance business.

Catherine has a Bachelor of Commerce in international business and a Bachelor of Science in psychology from Concordia University in Montreal. She also holds an MBA from Yale University.
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Survey methodology


Nationwide commissioned Edelman Intelligence to conduct a 20-minute quantitative online survey among a sample of 2,400 U.S. independent insurance agents, small-business owners, middle-market business owners, African American business owners, Hispanic business owners and general consumers between June 9 and June 25 to understand what business owners and consumers value when buying or renewing insurance policies, explore the different challenges each audience faces around insurance, gauge perceptions of the economy and how each audience is managing uncertainty, and find out the actions business owners and consumers have taken as a result of COVID-19 and the conversations they’re having with agents. As a member of CASRO in good standing, Edelman Intelligence conducts all research in accordance with Market Research Standards and Guidelines.