Liberty Specialty Markets and Baobab Insurance Partner to Combat SME Cyber Risks
Liberty Specialty Markets (LSM), a division of Liberty Mutual Group, and Baobab Insurance, a specialist digital underwriter, have joined forces to introduce a new e-crime insurance product tailored for small and medium-sized enterprises (SMEs).
This new fidelity insurance offering provides coverage up to €5 million and is designed to address the rising threat of digital fraud, including CEO fraud and deepfake scams. According to the partners, this marks a first-of-its-kind product specifically designed for the SME market.
LSM will provide the capacity for the product, while Baobab Insurance will manage operational aspects such as broker sales, product development, and underwriting. The collaboration is aimed at expanding coverage options for businesses navigating the increasingly complex digital fraud landscape.
The Growing Threat of Digital Fraud
The launch of this new insurance product comes in response to the increasing sophistication and scale of digital fraud threats, particularly those amplified by generative AI. As an example, cases of CEO fraud, where cybercriminals impersonate senior executives, surged by 17% in 2023 compared to the previous year.
LSM and Baobab have highlighted that traditional insurance offerings have not kept pace with these evolving cyber threats, often leaving businesses with limited options for protection.
Understanding the Difference: E-Crime vs. Cyber Insurance
While the terms e-crime insurance and cyber insurance are sometimes used interchangeably, there are key distinctions. Cyber insurance often covers both first-party losses (such as investigation and remediation costs after a breach) and third-party liabilities (like legal expenses from lawsuits). E-crime insurance, on the other hand, typically focuses on direct financial losses arising from criminal activities like theft, fraud, and forgery, whether perpetrated by external actors or by employees.
However, this distinction is becoming increasingly blurred. The specialist brokerage Amwins notes that the lines between crime insurance and cyber insurance are becoming less clear, especially in cases of social engineering fraud. Both policy types may provide coverage when employees are tricked into transferring funds or divulging sensitive information.
Streamlined Application Process
Baobab Insurance has designed its e-crime policy with a simplified application process. The standard industry questionnaire, which can often have around 20 questions, has been streamlined to focus on five key risk criteria:
- Number of employees
- Annual turnover
- Business activities in sanctioned countries
- Presence of dual control for invoicing
- Existing fraud prevention measures
According to Vincenz Klemm, co-founder and managing director of Baobab Insurance, CEO fraud along with deepfake scams present a substantial and growing risk to SMEs. By combining the new e-crime insurance with existing cyber and IT liability policies, Baobab aims to expand its offerings as a specialist insurer focused on technical risks.
The new fidelity insurance product became available as a standalone policy beginning in March 2025, with plans for future integration into cyber insurance application processes.
