Chronicle Journal: Finance

Consumers and Business Owners are Underprepared for Evolving Cyberthreats

COLUMBUS, Ohio, Oct. 1, 2020 /PRNewswire/ -- As COVID-19 drives more Americans to turn to virtual or digital business interactions, cyber criminals have found fertile hunting ground for new opportunities to exploit weaknesses. According to a new Nationwide Agent Authority survey, many American consumers and businesses are dangerously underprepared to defend against common and evolving cyberthreats.

(PRNewsfoto/Nationwide)

"Our survey highlights concerning vulnerabilities for consumers and small business owners, many of whom may be more focused on keeping their family or business afloat in tough times, as opposed to guarding against cybersecurity threats," said Catherine Rudow, Vice President of Cyber Insurance for Nationwide. "It's encouraging that middle market business owners appear to be more attune to risks and are proactively preparing their defense. But regardless of the type of client, now is an important time for insurance agents to talk to their customers about cybersecurity solutions and best practices."

Nationwide's research uncovered four key themes:

  1. Small business owners are underprepared and overconfident
  2. Middle market business owners have a better handle on cyberthreats
  3. Consumers underestimate their cyber risk exposure
  4. Agents are vital and can help clients understand cyber risks, including new and evolving threats

Small business owners don't recognize cyber vulnerabilities

Nationwide's research highlights an opportunity for agents to deliver counsel that small business owners may not know they need. Though nearly half of cyberattacks are aimed at small businesses, only 37% of small business owners reported believing they are at risk to fall victim to a cyberattack. Alarmingly, about one-third also said they are not confident they could recover if their business was attacked.

While nearly half of small business owners believe they are prepared to handle a cyberattack, only 39% of independent agents believe that their customers are prepared to prevent one. Only 17% of small business owners, or fewer than 1 in 5, say they have cyber liability insurance, and half (53%) say they do not offer cybersecurity training to their employees

Approximately 8 in 10 agents say many of their clients are unsure of how they are exposed to cybersecurity risks, they don't know what is covered in a cyber insurance policy, they lack knowledge, and they believe the chance they can fall victim is small.

Quick tip for agents

  • Make sure cybersecurity is part of your next conversation with small business clients. If they are part of the 83% without cyber insurance, bring some options to the table.

Middle market business owners have firmer cyber-footing

Nationwide's research shows that middle market businesses, which typically have more sophisticated operations, have a greater awareness and are more prepared for cyberthreats compared to small businesses. Seven in 10 (70%) middle market business owners are concerned about a cyberattack, and 79% feel they are well prepared to address an attack. They are also confident in their ability to recover from an attack (80%).

This confidence may be warranted as they are more likely than small business owners to have taken key security precautions, including purchasing cybersecurity insurance (71%). They also appreciate the support they are receiving from agents, with 7 in 10 (70%) indicating they trust their agent to provide insurance council on cyberthreats.

Quick tip for agents

Consumers underestimate their cyber risk

Survey data showed that consumers have quite limited knowledge of cyberthreats as an alarming 40% of consumers reported they have never been victim of any sort of cyberattack, including phishing.

  • About 2 in 5 consumers lack adequate knowledge of common risks.
    • Only 62% reported being knowledgeable about ID theft;
    • 56% know about malware; and
    • 57% know about phishing.

This lack of knowledge lends to poor preparation for potential cyberattacks. Only 1 in 3 (32%) said they feel prepared to fend them off and an alarming 8% reported taking zero cybersecurity precautions. Only 13% of consumers indicate that they have some type of cyber insurance.

Consumers are also unaware of what it takes to recover from an attack and just 51% believe they could recover at all. Four in 10 don't know how much it would cost to recover from a cyberattack. Of those who did experience an attack, 30% reported that it impacted their personal finances.

Quick tip for agents

  • Help personal lines clients understand the repercussions associated with a cyberattack, including the commitment of time and money. Compare and contrast that with the cost of identity theft insurance.

Agents can help clients with new and evolving cybersecurity issues

Insurance agents have an opportunity to strengthen relationships by offering effective counsel to help their clients protect against cyber risks, including several new and evolving threats that remain off the radar of most consumers and business owners. While the agents surveyed are well aware of the knowledge and protection gap, only about half (52%) say they talk to their customers often or always about cybersecurity threats.

Nearly half of agents said they are familiar with emerging cyberthreats, including:

  • 58% - IoT (Internet of Things) security breaches (associated with products like Google Home, Alexa, Next, Ring, Smart TVs, smart cars)
  • 58% - Mobile point of sale malware (associated with tools like Square, Clover, Toast and Shopify)
  • 53% - Denial of Service (DoS) attacks (when a business' system is intentionally shut down by a flood of traffic)
  • 47% - Deep fakes (manipulated video)

Small business owners reported an even lower understanding of these emerging risks, and consumers' understanding was dramatically lower.

A challenge may be that some agents need more education. While 84% of insurance agency principals say they provide plenty of resources to their employees, only 61% of producers and 42% of customer service reps agree, highlighting a potential disconnect between management and other customer facing representatives.

Quick tip for agents

  • This is a good time to reexamine how your agency shares information with colleagues and clients about cyber risks. With nearly half of agents saying they don't often have cybersecurity conversations with clients, there is an opportunity to strengthen relationships and drive new sales.

*These insights and more were uncovered through Nationwide's ongoing Agent Authority research series, which includes samples of independent insurance agents, various business owners, and consumers. Previous Agent Authority research reports: Agent-customer relationship; Small business owner needs and challenges; Middle market business owner needs and challenges; Agents' top concerns through the pandemic.

Survey Methodology:
Nationwide commissioned Edelman Intelligence to conduct a 20-minute quantitative online survey among a sample of 2,600 U.S. independent insurance agents, small business owners, mid-market business owners, mid-market business owners with fleet vehicles, African American business owners, Hispanic business owners and general consumers between June 9June 25 to understand what business owners and consumers value when buying or renewing insurance policies, explore the different challenges each audience faces around insurance, gauge perceptions of the economy and how each audience is managing uncertainty, and find out the actions business owners and consumer have taken as a result of COVID-19 and the conversations they're having with agents. For the purposes of this survey, middle market business owner was defined as anyone who self-reported as being a sole or part owner of a company with either 51-500 employees or $10M-$500M in revenue or 20+ fleet vehicles. As a member of CASRO in good standing, Edelman Intelligence conducts all research in accordance with Market Research Standards and Guidelines.

About Nationwide 
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor's. The company provides a full range of insurance and financial services, including auto, commercial, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; banking and mortgages; excess & surplus, specialty and surety; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com.

Contact:
Mike Switzer 
(614) 249-6349
SWITZEM1@nationwide.com

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SOURCE Nationwide

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