The latest innovation from Hartford Steam Boiler – specialist cyberspace insurance

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In August 2020 – just months after the start of the pandemic – Forbes magazine released its very first list of the highest paid stars on TikTok, the hugely popular shorthand video app.

The top-ranked teens and young adults, widely known as social media influencers, not only garnered tens of millions of followers, but also enjoyed their celebrity status with annual salaries. ranging from $ 1.2 million to $ 5 million.

In fact, from 2019 to 2021, according to market research firm Statista, the influencer market industry more than doubled from $ 6.5 billion to $ 13.8 billion. This growth is due, in part, to an increase in social media activity during the pandemic.

And the appeal of influencers hasn’t just changed the way businesses market – Estee Lauder, for example, invested 75% of her 2019 marketing budget in social media influencers – but also created a new opportunity. for insurance companies like Hartford Steam Boiler (HSB), which last month launched new social media income disruption coverage as an option in its cyber protection offerings.

HSB’s latest coverage covers lost income for customers who are paid for social media through advertisements, direct sales, marketing campaigns or other product placements, or who cannot access their account. due to unauthorized use, account takeover, or malware attack. .

The company’s latest innovation reflects an approach to developing specialized products in niche markets for which HSB has built a reputation. Last February, the 150-year-old insurer, which is part of Munich Re and based in downtown Hartford at 1 State Street, also introduced workplace violence response coverage.

“Over the past 20 years, we’ve really grown into specialized lines of business to create products where the coverage gaps are,” said James Hajjar, Head of Cyber ​​Practice at HSB. “As needs change, we want to be the first or close to the first in developing products in these spaces. “

Risk exposures

And over the past decade, Hajjar says, cybersecurity coverage has been a growing need for customers, as incidents of identity theft, account hijacking, and ransomware have escalated dramatically, especially during the decade. pandemic.

Federal Trade Commission figures show Americans have filed over half a million COVID-19 fraud reports and lost an estimated $ 480 million since March 2020, and the number of identity thefts has more than doubled to 1.9 million from 2019 to 2020, according to data from Alite Group.

While cyber coverage has been widely available to business clients for almost two decades, it has only gained momentum in personal business in the past four to five years, Hajjar said.

But risk exposures have become greater as homes become more technological – from smartphones and computers to networked entertainment systems and technology-controlled lights and thermostats.

More and more cybercriminals are targeting individuals, and while nearly one-third of people polled in a Verisk national cybersecurity survey have been victims of a cyberattack, only 20% said they have cyber insurance coverage.

Part of the low coverage adoption rates, according to research, is the lack of understanding of risk exposures among consumers, which insurers ranked in 2019 as the main challenge in offering personal cyber insurance. But the pandemic has started to alter consumer awareness and behavior. Over the past two years, the number of standalone cyber identity theft coverage policies has increased by 28%, according to AM Best.

According to Hajjar, understanding consumer needs plays a critical role in developing and pricing niche products for cyber coverage, especially in the social media market.

“We do a lot of [our own proprietary] research to understand what is happening in the [market] space, ”Hajjar said. “There is limited information in public sources, but we are [consumer] surveys and chat with experts to understand how consumers use social media, both in terms of frequency and severity.

He says that unlike standard equipment failure coverage, which is HSB’s primary focus, specialized cyberspace products take longer to get to market because each exposure – from data breaches to cyberbullying in going through identity recovery – is a different experience with different needs and partners.

“We have several partners [for policyholders] through the value chair, ”Hajjar said, noting that HSB’s coverages may include expertise in extortion remediation, computer forensics, credit monitoring and psychiatric counseling depending on the nature of the problem. cybercriminality.

Hajjar says that when families think about their risks, they often realize how vast the insurable risks are.

“When people think of [elderly] With parents getting cheated of money, protecting their children from cyberbullying, or securing their connected home devices, there is a wide appeal for a number of blankets, ”Hajjar said.

He said he was optimistic about the growth of the e-market and social media coverage. Industry data estimates that around 10% of social media users are currently monetizing their personal use, but the growth in the number of pure users – more than 520 million new users joined social platforms this year until July, or 16.5 new users per second, according to Datareportal – suggests a growing market for influencers.

It will also likely increase the number of cybercriminals, Hajjar said.

He says HSB and its partners are working with data to be able to predict and prevent when a cyberattack event will occur. Using application-based technologies, the aim is to detect, for example, whether a website is malicious or to inform policyholders if their personal information is on the dark web in order to mitigate the risks.

“The cyberworld never sleeps, so we’re constantly looking to keep up to date and make changes to the covers as the exhibits change,” Hajjar said. “It’s a constantly evolving space.


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