Ten Reasons to Buy Cyber Cover
2018 08 09
1) Data is one of your most important assets, yet it is not covered by standard property insurance policies Most businesses would agree that data or information is one of their most important assets. It could be worth more than the physical equipment that it is stored upon yet a standard property policy may not pick up a claim where this data is damaged or destroyed. A cyber policy can provide comprehensive cover for data restoration and/or rectification in the event of a loss up to policy limits
2) Your systems are critical to your day to day business activities but their downtime would not be covered by standard business interruption insurance Businesses rely more and more on technology to conduct their business from point of sales software to network communication systems. In the event of a hacking attack, computer virus or a malicious employee compromising these systems, a traditional business interruption policy will not respond. Cyber insurance provides cover for loss of profits and additional expenses associated with a systems outage that is caused by a “non-physical” peril like a computer virus or denial of service attack.
3) Cyber-crime is the fastest growing crime in the world, but most events will not be covered by standard property or crime insurance policies. The internet means that businesses are now exposed to criminals throughout the world and are therefore vulnerable to attack at any time of the day or night. Phishing scams, identity theft, and telephone hacking are all crimes that traditional insurance policies will not address. Cyber insurance can provide crime cover for a wide range of electronic perils that are increasingly threatening the financial resources of your business.
4) Third party data is valuable and you can be held liable if you lose it. Businesses are now holding more data electronically than ever before, which belongs to customers and suppliers. Non-disclosure agreements and commercial contracts can contain onerous warranties and indemnities in relation to the security of this data, which could trigger expensive damages claims if you experience a breach. Increasingly, consumers are more aware of their rights and are seeking legal redress in the event that a business loses their data. This exposure is increased if you hold any data on US consumers.
5) Retailers face severe penalties if they lose credit card data. Credit card crime is on the increase worldwide and this risk is transferred to the retailers that lose the data. Under merchant service agreements, retailers can be held liable for forensic investigation costs, credit care reissuance costs and the actual fraud conducted on stolen cards. These losses can run into hundreds of thousands of pounds for even a small retailer. Cyber insurance can help protect against all of these costs.
6) Breach notification costs time and money The UK Information Commissioner will have greater powers under EU Directives to enforce breach notification laws and impose fines. Businesses who lose sensitive personal data must provide written notification to individuals who are potentially affected. At present there is a growing trend towards voluntary notification in order to protect your brand and reputation. Customers expect transparency and integrity from the businesses they provide their data to. Cyber policies can provide cover for the costs associated with providing a breach notice even if it is not legally required.
7) Your main business asset is your reputation, so why not insure it? Businesses live and die by reputation. Certain reputational risks can’t be insured, but you can insure your reputation in the event of a security breach. You could run the risk of losing your loyal customers if your systems have been compromised and this could harm your business far more than the immediate financial loss. Cyber insurance will pay for the costs of crisis containment experts to help restore this, and also for the loss of future sales that arise as a direct result of customers switching to your competitors.
8) Claims are increasing due to fast growing social media usage Social media is everywhere with information being exposed to the world instantly. Often little control is exercised over what is said and how it is presented but you and as a business you could be responsible for what your employees put on sites such as LinkedIn, Twitter and Facebook. Cyber insurance can provide cover for claims arising from leaked information, defamatory statements or copyright infringement.
9) Portable devices are at greater risk of loss or theft. The ability to work away from the office with a laptop also increases the danger that important and confidential data could be stolen or lost much more easily. Laptops left on a train, stolen iPads and mobile phones or a memory stick going missing are all good examples. The devices themselves are being targeted with viruses being built just for them. Cyber insurance can help cover the costs associated with a data breach should a portable device be lost, stolen or fall victim to a virus.
10) Hackers don’t always just target big businesses but lots of small ones too. Large-scale hacking attacks which reach the media tend to involve big companies, but as a small company you are also at risk and may not have the financial resources to recover after a hacking attack or other kind of data loss. Over a third of global targeted attacks are aimed at businesses with less than 250 employees. These attacks are becoming one of the greatest risks faced by smaller companies which could be potentially financially crippling in the event of a privacy breach or data loss. Cyber insurance is therefore a crucial cover in the modern world.
Richard Loach – Commercial Account Executive