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Cyber Insurance

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by

Brett Landsberger

on 7 August 2015

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Transcript of Cyber Insurance

Opportunities
Government Initiative
Relative lack of Industry Expertise in UK
52% of CEOs believe they have cover
Growing market
Gallagher Cyber Protection
Marketing and Sales
Today's Agenda
Introduction
Project Goals
Cyber Insurance
Market Research
Introduction to Gallagher Cyber Protection (GCP)
GCP Sales initiative
Marketing
Sales
Market Research
Project Overview
Gallagher Cyber Protection
(GCP)

A Market Overview
and Product Introduction

Jake Crowhurst
Morgan Joseph
Brett Landsberger
Liam McTiernan
Nadine Oakes

Our objective: Identify a wholesale insurance product that is being undersold, then develop and market a retail version suitable for new and existing clients.
Approximate run time: 45 minutes
Please hold any questions until the end
In conclusion...
Overview
Selling Gallagher Cyber Protection
Competition
Market Evaluation
First Party Cyber Risk Exposures
• Loss or damage to data
• Business interruption
• Cyber extortion
• Reputational damage
• Theft of money and digital assets
Third Party Cyber risk exposures
• Privacy breach
• Loss of data

Building
Awareness
Selling a New Cyber Policy
Positioning
Internal Marketing
Increased Technical Knowledge
Integration of Cross Selling Mentality
The AJG Profile
4 W's + H
Management Responsibility
Internal Fliers and Posters
Integration of Salesforce
Training Seminars
Enlargement of Cyber Team
Fly Sheets
WHAT
WHO
WHEN
WHERE
HOW
Cross
Selling
New Business
Third
Parties
GCP
Current AJG Clients
New SME and Corporate
3rd Party Referrals
Government
Adult Industry
Financial Data
October 2015
November 2015
2016
2020
Initially London
Rest of the UK
Strengths
Market Reputation
Weaknesses
Team Strength
Product
Team Size
Inability to Attract Experienced Brokers
AJG Reputation
Expertise
Culture

A Complete and Convenient Policy

A Safeguard for your Business


Emphasis on Added Value
To client
To Third Parties


Specialist Insurance Cover
Our Product:
Cyber Insurance
Cyber insurance is still in its infancy
No industry standard retail cyber cover
Cyber insurance sales are predicted to grow faster than any other cover in the next ten years

Threats
Competitors
Potentially Large Claims
Common occurrence of cyber attacks

• Put together a comprehensive insurance package
that gives clients a wide range of coverage
• The market is rapidly growing and there are countless opportunities to become a market leader
• We managed to establish the key factors required for this product to succeed
• Critically assessed the market and Gallagher’s positioning
• Create a simple, realistic marketing strategy


All ideas accounted for
Good organization
Communication
Gained a great insight into different areas.
Had Fun!
Our Team
Education from the top down is important
Educate management and brokers
Develop a brochure style guide to the cover
Use statistics
US cyber case study

Cross Selling a Cyber Policy
Differentiation Is Key
GCP fills gaps that other policies often have
AJG value added proposition

UK Cyber Strategy

Current Cyber insurance market is fragmented and complex (18 insurers offer fundamentally different products)
Reduces broker willingness to sell
Reduces customer willingness to buy
Exposes AJG to potential E&O concerns

We want to capitalize on London Speciality’s niche practice and expertise, while benefiting from the UK retail distribution platform

Transfer experience learned from US Micro (small business Cyber online platform) that went live in December 2014 - ajgcyber.com
Need to establish clear guidelines to the regions to ensure best product and best customer experience
European legislation will soon require companies to notify their stakeholders about a data breach, within 24 hours where possible, and this has cost and reputation implications.
"There are only two types of companies: those that have been hacked and those that will be"
A UK Government survey estimated that in 2014
81%
of large corporations and
60%
of small businesses suffered a cyber breach.

The average cost of a cyber-security breach is
£600k-£1.15m
for large businesses and
£65k-115k
for SMEs.
UAV Insurance
2015 UK Cyber Risk Survey Report
26.6%
16.6%
Tier one threat
Placed as a top 5
risk priority
Not important enough to
get on the risk register
Cyber-Security
Temporary Event
Coverage
Cyber Liability
An average of around 315,000 new varieties of malicious malware is created every day of the year
Global Premiums
£850m
£1.6b
2013
2014
London is a major centre for cyber insurance
£160m
£75,000
Need to Re-key
v.
Demand
Changing
legislation
Growing number
of attacks
+
+
=
US data protection coverage
Lloyd's
Association of British Insurers (ABI)
HM Government
Cyber Essentials
Guide on Cyber Insurance
Cyber Essentials
x2
2013-2014
Cyber threats are estimated to cost the UK economy billions of pounds every year

Data Breach
Cyber Business Interruption
Cyber Crime
Package to cover:
Gallagher US Cyber Distribution
15,000 broking agency relationships
1,1014 agencies currently live on the online small business platform
140,000 direct clients
Retail and AJG Select
Lack of communication between hubs
No specialized cyber team members
Current UK Cyber Market Issues
1/2
of firms interviewed were
unaware insurance was
available for cyber risk
2%
of large firms have
explicit cyber cover
Around
Just
dropping close to
0
for smaller firms
60%
While more than
of incidents reported to insurers are the result of accident, the majority of the high-severity losses are designed to cause harm.
UK v. USA
Harder to properly price insurance due to lack of data about online attacks
46 US states require companies to declare customer data breaches
UK has a voluntary platform for disclosure, CERT, which only has 900 participants
6.3x
the cost of property cover
Launched in June 2014
Clear statement of technical controls
Provides a qualification for firms to present to customers and creditors
Valuable signal of reduced risk when underwriting cyber insurance
Helps insurers to differentiate risk in the mass SME market
SMEs
Reduced question set
Larger Organizations
More intensive due dilligence
Data Liability
Adminstration Obligations
Reputation
and Response costs
The
Optional
Add-ons
Exclusions
Any Questions
Special Thanks
Tom Draper for helping with the research and understanding of cyber insurance
John Durkin for the opportunity to complete the internship at AJG
Franziska Thielsch for helping us prepare for this presentation
Full transcript