Cyber Solutions Gain Traction in Personal Lines

Imagine your house is on fire. Besides your family members, what do you grab before you escape?

Matt Cullina, CEO of CyberScout, an ID theft resolution and data breach management firm, thinks pets and mobile phones are probably neck and neck when it comes to what the average person holds most dear. Consider that Americans spent up to five hours a day on their mobile devices in 2016, according to analytics firm Flurry.

“Mobile phones are central to life these days,” Cullina says—and that means personal cyber exposure “is no longer just a tangential emerging risk. It’s a core risk for everybody.”

“Individuals have much the same exposure small businesses have,” agrees Eric Cernak, vice president at Hartford Steam Boiler. “If you have a personal computer or mobile device, you’re vulnerable to a cyberattack.”

CyberScout has observed a spike in targeted events against homeowners “that we would have seen only impacting businesses a few years ago,” Cullina points out, citing ransomware attacks, wire transfer fraud and social media scams as the most common examples. “The consumer exposure is starting to catch up with the commercial exposure.”

When IA covered cyber exposures in the high net-worth market back in February, personal lines insurers had yet to develop solutions. But today, Cullina says CyberScout is working with “more and more insurers that are starting to offer family or personal cyber coverages” [see sidebar].

Although many personal lines cyber policies were originally based on identity theft coverage forms, newer personal lines cyber forms “are really the equivalent of a commercial lines cyber endorsement,” Cullina explains. “They may include notification costs for data breaches and responses to ransomware, and they may cover first-party exposures and expenses or even liabilities associated with cyberbullying.”

Anthony Dagostino, global head of cyber at Willis Towers Watson, anticipates more coverage options “by the end of this year and into next year,” he predicts—especially if there’s movement on the regulatory front in the aftermath of the Equifax breach.

Cernak agrees that the industry will likely “see growth there pretty quickly. You’ll see a number of carriers beginning to offer that coverage over the next 12-18 months. It’ll be much more common by the end of 2019.”

Jacquelyn Connelly is IA senior editor.