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What you need to know about
Cyber Insurance is also commonly known as Cyber Crime Insurance, Cyber Liability and Data Breach Insurance depending on what you’re looking for. In essence, they all mean the same thing and will commonly be defined as overall Cyber Insurance which can either cover a first-party loss (direct losses associated with your business) or third-party loss (losses associated with other parties).
Cyber Insurance is a newly created insurance and has only been in place for a couple of years. The policy was created due to our need and reliability of technology to operate our businesses. The technology movement also opened up a number of risks to businesses through the storing of personal information, cloud storage, and day-to-day server operations.
If you ask any business whether or not they could operate a week or even a day without their computer, website, or access to their storage online the answer is most likely no.
As this is a newly formed insurance policy, not many businesses have yet put Cyber Security Insurance in place and unfortunately, every year that you don’t have a policy in place increases your risk of having a significant financial loss occur.
There are multiple sections of a Cyber Insurance policy that can provide significant coverage and benefits to you as a business.
Why should you use Priority Insurance Brokers to arrange your Cyber Security Insurance?
With it now being extremely simple and affordable for hackers placing a lock or a ransomware on your server is now very easy yet can be a significant impact to your business. Most small business owners consider paying the ransom request to gain access back.
A data breach is now a notifiable offence and is now regulated. If you suffer a data breach to your server than you as a business owner have an obligation to report it. This can expose your businesses to fines, penalties and potentially compensation requests.
Should a loss occur most cyber insurance policies will provide a form of business interruption cover that will reimburse you for your downtime, subject to a waiting period.
There are a number of different sections that make up a cyber crime insurance policy.
The best way to outline what the cyber security insurance policy covers is by breaking it down into two different sections.
One is what we refer to as first-party loss and third-party loss. First-party is a loss caused to your business for example, your server is hacked and you are unable to access company files.
A third-party loss is a loss that occurs to a third party from the breach of your data.
We heavily rely on technology and it often makes up a big part of your business.
As your business starts to rely on different technologies to conduct business it is important to have a policy in place that should something go wrong with these critical technologies than your loss can be compensated.
There are also a number of regulated industries now that require you to notify the applicable regulators should your data be breached and as suchs hefty fines and penalties could be issued. For example, data breaches need to be reported to Office of the Australian Information Commissioner
If your data is breached and third party details are accessed there is a good chance that you could then become liable for third party losses that occur.
For example, fraudulent transactions, spoofed payment details and further data breaches.
Most managed service providers try to implement ways to reduce your risk of a data breach occuring however, they cannot completely prevent it. Most managed service providers also don't include any investigation work, recovery or emergeny backup services. A cyber insurance policy will usually assist in recovering lost data and getting you back online as quickly as possible.
We understand that it takes a lot of time and effort to run your business which is why our team specialises in providing tailored advice to your business.
We provide recommendations to your business on insurance policies that you should consider to protect your business. These include providing tailored advice in regards to specialty policies like cyber security insurance.
A common claim example
A large company had their server hacked and when employees came into the office one morning they were unable to login to their computer system.
The company had its internal IT team review its servers and found that its system had been hacked. The IT team decided that they had to go back on their server files to discover how far back they had to go to reinstate a backup so that they could continue working.
The restored backup was 30 days prior which caused all data that had been processed within that 30-day period to be unrecoverable.
The additional downtime was covered where employees were unable to work for a week and the lost business during this time was also covered along with the emergency restoration work.
As technologies become a vital part of our business, hackers and criminals now prey on businesses of all sizes to steal sensitive information and usually hold it at ransom.
If you have technology that your business can’t operate without or hold sensitive information it is strongly recommended that you consider having a cyber insurance policy in place.
Data breach reported every 10 minutes
Average ransom request
Increase in cyber crime in 2022
The insurer requires information with regards to your technology related exposures. Typically questions that are asked are:
For the cover and how much we rely on our technology, cyber insurance is extremely cheap. Cyber insurance policies are expected to continue to increase as claims come through to the insurers. However, it’s not usually a case of if you get hacked or suffer a cyber incident but more so when. Most businesses have had some form of data breach in the last 5 years and it is only expected to increase.
For data breaches it is calculated that you could incur a $150 fine per clients information that is leaked. This is just the fine that is passed on from the regulators and other associated costs could increase significantly from there.
Cyber policies do usually cover ransomware attacks against your business however, once a claim has been made it is usually up to the insurer on how it progresses.
A lot of people think that paying a ransom is the easiest way forward however, its been proved time and time again why we shouldn’t trust criminal enterprises.
Data shows that companies who are known to pay a ransom will usually get retargeted.
A cyber insurance policy can provide you protection for the following:
There is no discrimination when it comes to hackers and online data thiefs. Data shows that both small and large businesses would be considered at risk of a data attack. In some circumstances, smaller companies are more at risk as they don’t have the resources at hand to withstand an attack. Small businesses have also been shown to just pay ransom requests and as such have then been hacked and held at ransom for a second and third time.
Like most other insurers, your Insurance Broker has access to placement facilities with many different insurers and underwriting agencies. Your Broker will also work with you to review the appropriate level of cover.
In a short response, yes.
If you at all rely on your computer or servers to generate an income then you should consider having this.
Even more so if you are responsible for holding onto client data.
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