While headlines frequently cover large-scale cyberattacks targeting major corporations, the growing threat of cybercrime in personal homes often goes unnoticed.

As everyday life and home environments become increasingly connected to the internet, individuals face escalating risks related to personal cyber threats. Despite this rising danger, many consumers remain unaware of the necessity for protective measures tailored to their digital lives.

Increasing Vulnerability to Personal Cybercrime

According to the latest report titled “Addressing the Personal Cyber Protection Gap” published jointly by the Insurance Information Institute (Triple-I) and Hartford Steam Boiler (HSB), a subsidiary of Munich Re, three out of every four consumers have experienced some form of personal information loss or theft. Furthermore, 28% of individuals have had their social media accounts compromised or hacked.

The financial impact of these incidents is significant. The average claim payout for cyber-related home incidents exceeds $10,000, underscoring the costly consequences of these personal cyber events.

Traditionally, concerns around cybercrime for individuals focused mainly on threats to financial accounts or identity theft. However, the scope of vulnerability has expanded dramatically as the number of internet-connected devices in homes grows. Items such as smart doorbells, thermostats, security cameras, and other smart home technologies are increasingly common targets. Any device connected to the internet is susceptible to malware infections, which can gather sensitive data to be exploited by cybercriminals.

These risks have become especially pressing in light of advancements in “deepfake” technology and generative artificial intelligence (GenAI), which can be used maliciously to deceive or manipulate victims.

Neil Rekhi, product manager for personal cyber insurance at HSB, emphasizes in the report: “As our digital lifestyles become more intertwined and interconnected, the potential risks grow in tandem. The pace at which personal cyber threats are evolving is accelerating rapidly, and securing personal cyber insurance is a critical means of protection against these emerging dangers.”

The Growing Gap in Cyber Insurance Coverage Awareness

Cyber insurance has emerged as one of the fastest-growing segments within the property and casualty insurance industry. The rise and increasing severity of personal cyber threats have pushed insurers to clarify policy language regarding coverage and exclusions. Additionally, efforts have been made to educate risk managers about the benefits and value of personal cyber insurance, while also balancing cost control and premium stability.

Despite these advances, a significant awareness gap exists between insurance professionals and consumers. A recent survey reveals that 84% of insurance agents and brokers recognize the importance and value of personal cyber insurance. However, only 43% believe their clients fully understand or appreciate the value of such coverage.

Although 77% of agents reported that they have presented personal cyber insurance options to clients at least once in the past month, more than half (56%) noted that their clients do not grasp the significance or benefits of this type of insurance. When it comes to deciding whether to purchase coverage, 71% of clients prioritize the cost and scope of coverage offered.

While a majority of agents acknowledge the critical role personal cyber insurance plays, only 73% feel confident explaining the details of this coverage to clients, and just 68% are comfortable actively selling it.

Dale Porfilio, Chief Insurance Officer at Triple-I, comments on this issue in the report: “The gap in understanding between agents/brokers and consumers regarding personal cyber risks—and how insurance can mitigate those risks—is a clear call to action for insurance professionals.”

The Crucial Role of Agents and Brokers in Educating Consumers

The report stresses that insurance agents and brokers must lead efforts to bridge this gap by becoming more proactive and comfortable in discussing personal cyber risks and available insurance solutions with their clients.

Agents are encouraged to anticipate and prepare for customer inquiries about policy specifics, such as exclusions, deductibles, and other factors that may affect the perceived value of cyber insurance products. They should be equipped to clearly explain the extent of coverage offered by policies, along with any limitations or deductibles that may apply.

In essence, well-informed agents play a pivotal role in increasing consumer awareness of cyber threats and the necessity of personal cyber insurance as a protective measure. By doing so, they help reduce the likelihood that consumers will fall victim to cyber scams and ensure that those who do suffer losses have financial protection in place.

In summary, better educated and more proactive insurance agents can significantly improve consumer understanding, enabling individuals to safeguard their digital assets and navigate the complex landscape of personal cyber risks with confidence and peace of mind.