Trying to Understand the New FTC Guidelines? We Can Help!
The United States Federal Trade Commission (FTC) has released security guidelines on purchasing cyber insurance for small businesses.
According to data from the National Cyber Security Alliance, more than 70% of cyber attacks target small businesses. In light of this trend, the FTC’s new guidelines focus on important points of coverage needed to address evolving cyber exposures. The experts from ProWriters specialize in cyber liability and can help you break down the FTC’s recommendations while adding some of our own tips for finding a policy that includes adequate cyber protections for businesses.
What Are the New FTC Guidelines?
The new FTC guidelines highlight the cyber exposures small businesses face and suggest specific policy details to look for when choosing a cyber insurance plan.
For first-party coverage, which protects the data of affected businesses and customers in the event of a cyber incident, the FTC recommends looking for policies that cover:
- Legal counsel to determine your notiﬁcation and regulatory obligations
- Data recovery and replacement
- Customer notiﬁcation services
- Crisis management
- Cyber extortion and fraud
- IT forensic services
- Regulatory fees, ﬁnes, and penalties
These first-party exposures can be extremely costly to a business that falls victim to a cyber attack. However, cyber incidents often include third-party exposures, which most often refer to issues of liability when a third party brings a claim against an affected business. The FTC security guidelines also include recommendations for third-party coverage, recommending policies that cover:
- Payments to affected consumers
- Expenses related to liability claims and lawsuit settlements
- Losses related copyright, trademark infringement, and defamation
- Costs related to litigation and regulatory inquiries
- Costs related to accounting
The recommendations released by the FTC provide a good starting place for proactive small business cybersecurity insurance coverage. But because of the volatile and dynamic nature of cybersecurity and cyber insurance, we’ve built on the FTC security guidelines and included additional tips from our seasoned insurance experts.
Pro Tips From ProWriters: Choosing a Cyber Policy
At ProWriters, we bring more than two decades of experience to the cyber insurance space. Our expert services include a flexible cyber liability insurance program with access to customizable policies for companies of all types and sizes. When choosing a policy offered by ProWriters or any other company, there are a few key factors that can make all the difference.
The cyber insurance landscape is competitive, with multiple wordings, different coverage options, and varying reputations for claims paying. For this reason, it’s important to consult an expert with experience in cyber insurance coverages to help you know what to ask for and how to find a policy that is tailored to the specific needs of your clients.
Cyber incidents are often incredibly costly to businesses. Research National Cyber Security Alliance found that 60% of small and medium-sized businesses (SMBs) that were hacked went out of business within six months.
Many SMBs simply can’t afford the cost of a data breach. A Kaspersky Lab study found that targeted cyber attacks cost small businesses $188,000 on average, while similar incidents cost larger enterprises an average of $2.2 million. For this reason, we recommend treating and selling cyber insurance to clients as a kind of catastrophic insurance policy. Obtaining adequate limits on a policy is a crucial component of a comprehensive cyber insurance policy.
ProWriters tailors limits to meet the needs of each client. We provide many SMBs with limits of $1 – 2 million or higher depending on their needs, and our Cyber IQ Comparative Rate portal has streamlined the quoting process up for to $10 million in limits.
Our experts are equipped to offer limit recommendations for accounts based on a number of factors, including:
- Electronic record count
We have the capacity to offer up to $100 million in limits for larger accounts, so whatever the needs of your client, ProWriters can deliver.
Given the prevalence of certain types of claims, we recommend looking for specific additional coverages when choosing a cyber policy. Crime and social engineering is one important example. This includes involuntary parting of funds (when criminals steal credentials to direct funds into an outside account) and voluntary parting of funds (when criminals use social engineering to deceive a target into transferring funds out of their account).
We also recommend looking for business interruption, dependent business interruption, and system failure coverage. These will cover lost revenue due to disruptions caused by a cyber incident. This kind of coverage could determine whether or not a business will be one of the 60% of SMBs that never recover from a cyber attack.
With a dedicated team of cyber experts backed by 20 years of experience, ProWriters offers superior service and coverage for cyber liability insurance. Our innovative Cyber IQ Comparative Rate portal allows agents and brokers to get multiple quotes from multiple carriers in just minutes. For more information about FTC guidelines or SMB cyber recommendations, speak with a ProWriters expert today.