Today, there is a lack of understanding regarding cyber liability policies and deficiencies in the industry's ability to convey the true value of cyber products to clients. Insurance professionals must address these issues within the industry, which will lead to greater understanding of cyber liability among business owners and risk managers.

Each day cyber threats grow in complexity, with attacks occurring more and more frequently. This underscores the need train insurance talent to better understand cyber liability and tailor a policy that addresses the specific risks that each unique business is most susceptible to experiencing.

This year, there are a number of developments impacting professional liability and cyber policies ranging from the conversion to Euro, MasterCard and Visa in the United States, to the growing number of ways the world connects to the Internet.

If you're truly interested in understanding cyber liability, you must be aware of the most pressing threats to businesses today.

After chip-and-signature cards were introduced in the United Kingdom in 2005, online fraudulent purchases increased nearly 40 percent over the next 10 years. (Photo: iStock)

EMV and its effect on e-commerce

The United States is experiencing a shift in the payments industry that will drastically alter how fraudsters seek to exploit consumer credit card information.

The ongoing conversion from magnetic stripe credit cards to Euro, MasterCard and Visa chip-and-signature technology will likely shift fraud away from card-present transactions to card-not-present transactions, such as ecommerce. For example, in the United Kingdom, where the Euro, MasterCard and Visa liability shift occurred in 2005, card-not-present fraud increased by nearly 40 percent over a span of 10 years.

This creates the need for businesses — specifically, merchants who do a great deal of business online — to fully understand that the risk they assume from their daily operations is growing. The insurance industry as a whole must educate merchants on the shifting nature of the risk they assume and tailor cyber insurance policies to their evolving needs.

Healthcare breaches accelerating

Recent studies found that 35.5 percent of all data breaches targeted the health care industry. Moreover, those breaches accounted for 66.7 percent of all compromised records from data breaches. The volume of attacks impacting the healthcare industry is due to the valuable information contained within individual's healthcare records: The life of stolen payment data is much shorter than the personal information contained within healthcare records.

This past February, the Hollywood Presbyterian Medical Center was the victim of a cyber attack in which ransomware was used to shut down the network computer system until the hospital paid a ransom of $17,000. These types of attacks are growing: Recently the Titus Regional Medical Center, a small hospital in Mount Pleasant, Texas, confirmed that it had been affected by a similar ransom attack.

Just in the past year nearly 3.8 million new ransomware variants were detected by McAfee Labs. Healthcare providers and businesses that house this precious data must understand the inherent risks of holding records and work with a broker or agent who knows how to guide health care providers through the process of tailoring a cyber liability policy to their specialized needs.

Related: Cyber Attacks: The Next Health Care Epidemic

Interconnectivity among smart-home device and wearable devices creates new ways fraudsters can break into a person's or an organization's network. (Photo: iStock)

Growing Internet of Things

New products are introduced each day that provide different ways for individuals to stay connected. From cars and homes to watches and eyeglasses, the Internet of Things, is growing rapidly. Cisco estimates that the number of connected devices worldwide will rise from 15 billion today to 50 billion by 2020.

This type of interconnectivity creates new entry points into an organization and expands a perimeter that must be constantly protected. According to a 2015 Verizon data breach report, in 70% of attacks where the motive is known, there's a secondary victim. In other words, the organization is targeted as a way to advance a different attack against another victim.

With the Internet of Things and increasingly more employees connecting to company cloud servers through wearables, cell phones, and personal tablets, this connectivity can open the proverbial floodgates for fraudsters to access valuable customer data. The insurance industry must understand what this growth in Internet of Things means for cyber risk and ensure that there are experts who can tailor specialty policies that will protect both large and small institutions.

David Derigiotis is the director of the Professional Liability Center of Excellence at Burns & Wilcox, a wholesale insurance broker and managing general agent. He is also the director of R.B. Jones, a specialty managing general agent. Both companies are owned by Farmington Hills, Michigan-based Kaufman Financial Group. Opinions expressed in this article are the author's own.

Related:

Internet of Things Will Change Risk for Retail Insurance Brokers

Using IoT to Better Serve Customers