Speaking with Insurance Business, general manager of Coalition Australia Trent Nihill said that insurers are creating the block between SMEs and insurance takeup.
Based on the feedback from brokers he spoke to, SME owners are aware of cyber risk, but don’t have the time to fill out 8 to 10 pages of questionnaires from insurers, nor do they think that cyber incidents will happen to them.
As a result, brokers struggle to get quotes for cyber insurance to SMEs.
"The challenge often is not necessarily the price of selling it, it's actually getting the quote in the first place," he said.
The Insurance Council of Australia said in 2023 that only 20 per cent of Australia SMEs have cyber insurance, a massive drop from larger businesses, 35 to 70 per cent have standalone cyber insurance.
A major factor in this is that SMEs often outsource their IT responsibilities and needs to managed service providers (MSP), yet they themselves are in charge of insurance decisions. While a broker can run a business through the relevant terminology, the likelihood of a client being able to answer relevant questions needed for filling out insurance applications is low.
"So we're asking complex questions to business owners where it's just not their domain," Nihill added.
The other concern is that these questions assume a yes or no answer, which isn’t always something that translates in the cyber industry. For example, asking if a business uses passphrases or password management tools may not be a flat “yes”, but a “mostly” or a “yes, however.”
With the weight of the answers to these questions being so significant, with businesses unsure of their answers risking claims being denied, cyber insurers need to simplify processes and make questions easier to answer.
"It's on cyber insurers to ask the questions better, or when the questions aren't required, don't ask them at all," Nihill said.
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