Items like data, content, software code, brands, confidential information, inventions, industrial know-how, and design rights are integral to corporates
Global companies often fail to recognise the importance of intangible assets, as they can be difficult to value through traditional accounting methods. Yet a spate of high-profile cyber-attacks, data leaks, and cyber-enabled intellectual property theft cases have underlined the importance of keeping intangible assets safe.
So far in 2020, both the Australian government and private companies including Nielsen have been hit with high profile cyber-attacks, highlighting the need to protect intangible assets. According to Australian insurers, this is driving the need for new and improved insurance solutions.
The Australian insurance market has typically focused on traditional classes of insurance, with quantifiable, tangible risks at the front-of-mind for organisations. But in recent years, intangible risks have risen up the agenda, prompting risk managers to seek specialist coverage as corporate risk profiles change.
Broker Aon has seen a 30% increase in the purchase rate of cyber insurance over the past three years, with 2020 looking to eclipse that growth this year, says Michael Parrant, cyber insurance practice leader at Aon. “This has been spread across SMEs and through to large corporates in Australia.”
“Intangible assets have become increasingly popular to discuss and investigate,” Parrant adds. “While these assets have existed for some time, the insurance solutions and the available capacity has been limited. Over the past 12 to 24 months, we have noticed a significant increase in available capacity, an expansion of available coverage, and a more sophisticated manner of valuing those assets.”
Parrant expects the take-up of intangible asset insurance to grow as Australian companies gain more of an understanding of their risks.
Cyber policies have become common over the past decade, combining the cover of first-party damage and third party damage, while protecting against business interruption and financial losses from attacks. These days, companies expect their insurer to offer cyber products as a matter of course.
The cyber insurance market has expanded “significantly” over the past few years, Parrant said, “to provide coverage that was reserved for only the most sophisticated purchasers”.
He added: “This trend will likely continue for the coming five years, especially with traditional lines of insurance becoming more concerned with cyber exposures within their lines of insurance; however, the coverage available today is far more mature than it was five years ago.”
Overall, the Aon executive believes demand for non-traditional lines of insurance is growing in Australia, and “becoming more mainstream”.
“We can compare cyber and intellectual property insurance to D&O insurance from 20 years ago as an example. D&O insurance was considered a discretionary purchase, whereas now it is a fundamental line of insurance to most organisations. Cyber and intellectual property are following a similar evolution; however, the timeline is vastly condensed.”