Caroline Gregory, specialist broker at Vantage Professional Risks believes many companies are unaware of the implications of a cyber breach. As she explains to Ian Trevett, lack of cyber cover can be fatal for a company
Insurance is an unusual sell. The reason we take out any insurance is, if we are honest, through fear. We insure our home because of fear of burglary or a plumbing emergency; we insure against death and injury; we take out travel insurance because we worry about getting sick abroad. So when I met with insurance broker Caroline Gregory for a coffee and she brought up the subject of insuring against cyber crime, I knew what to expect.
“Ok, I know what’s coming,” I say to Caroline. “This is where you try and put the fear of God into me.”
“No,” she denies. “Trying to scare people is not what we do.”
And then she proceeds to scare the life out of me!
“Cyber is the most pressing issue,” says Caroline. “Most businesses are unaware of how the law will change. You are responsible if a cyber breach affects your clients or the data you hold for them. The compensation a company would have to pay would take most small companies under. Every business should be looking at this.
“There are two elements to cyber coverage. The first is your own cover, where you can insure against being hacked or a phishing attack and it covers the cost of the business interruption. It also insures against the cost of loss of data.
“Then there is the third party insurance, which is similar to Professional Indemnity. If you have a breach and someone accesses third party data, such as happened to Talk Talk, you have the cost of notifying the people affected and then there is the cost of the PR. Trying to redeem yourself is an expensive cost. There is also the cost of defending yourself in the event of a claim. You have to offer 12 months of credit monitoring for anyone affected. If you have a large number of company records, it is a high cost, as you are charged for each record. It has been calculated that the average cost of a breach for an SME is between £600,000 to £700,000. A company needs to ask if they can cover that cost. The answer would almost always be no. Cyber cover is fundamental to any business.”
So this isn’t being scary?
“It does happen,” stresses Caroline. “The stories you hear on the news are only about the big companies. When a small company is hit, it isn’t reported. If I had a pound for everyone who says that it won’t happen to them, I’d be very wealthy.”
Of course, Caroline is totally correct. Few companies insure against cyber crime, but we are all vulnerable. We regularly feature advice on avoiding cyber crime, but a skilled hacker would easily overcome the defences of an average company, and the financial liabilities are huge.
Caroline specialises in the placement of niche insurance policies, and helps companies with their risk management and analysis, to help them mitigate against unforeseen problems. Her experience can be invaluable for companies and she adheres to the core values of Vantage , which include respecting the customer, understanding their needs and ensuring that they are treated fairly.
“We have a service called Vantage Point Review which is effectively an insurance and risk health check,” she explains. “We go in to a company and understand the business to calculate the risk to the company. We look at policies in place to see that they are properly covered, and advise on areas where they are exposed. We offer advice and share our knowledge.”
Caroline certainly has amassed plenty of knowledge of her industry. She started out in the City, working in claims on renewable energy, before switching over to underwriting for a Lloyds syndicate specialising in professional indemnity. After moving closer to home by joining Vantage, she retained the links to Lloyds of London, and Vantage works closely with the London underwriters.
“We value the security of working with the Lloyds market,” says Caroline. “It is a strong brand and features well-established companies. One difference I have noticed is that the Lloyds underwriters work in a much more collaborative way than is often the case outside of the Lloyds market. Outside Lloyds, it can be more competitive. I think the reason is that Lloyds underwriters are often very niche and specialist, so it makes sense to work together. They often deal with unusual requests.
Lloyds underwriters tend to share the risk around, so an underwriter is at less risk of being over-exposed in a market. They have more options available to them.”
“It is good to combine the advantages of London with the benefits of woking locally. I spend more time with clients now. It is actually a dual-facing role, where I deal directly with clients and also with the London insurance markets. I am now focussing on developing the Sussex and Surrey markets.
“There are big business hubs in the south east. When you meet more people you realise just how dynamic the business scene is in Sussex and Surrey. It is much more vibrant than many people realise. It is an exciting opportunity for Vantage to have a sustainable local growth of the next few years.”
Vantage Group is a London-based insurance brokers which was originally best known for its specialised services for travel and tour operators. It has since grown into a group of companies each striving to provide high quality insurance products and expertise in their respective markets, such as the classic car market.
South of London, Vantage has an office in Worthing which serves Surrey, Sussex and Kent: “We work mainly with the professional services, advising on professional indemnity, medical malpractice and management liability.
“There are six of us in the Worthing office - it is a small team, but it is a more personal approach. We also work in manufacturing and logistics - any company that is looking for a bespoke cover package.
“We are ambitious but we want to maintain our levels of personal service. It is better to have more of the right companies and not over-grow too quickly. We want to keep at the level where we are are offering a personal brokerage service. But we are expanding quickly, particularly in cyber cover.”
It may not be much fun facing up to the risks a company faces, but it is essential and it is always worth getting expert advice.