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. However, many small business owners aren’t properly informed and may be asking: What are FTC guidelines? How do they affect small business owners? Here, we’ll break down the FTC Security Guidelines (in addition to some of our own tips) so you’re ready to educate your clients.
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 reasonable security measures focus on important points of coverage needed to address evolving cyber exposures.
What Are the New FTC Security Guidelines?
FTC Protecting Personal Information: A Guide for Businesses
The new FTC cybersecurity 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
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.
Many consumers may ask: What federal regulation protects consumer privacy? This also falls under the FTC cybersecurity regulations, which recommend third-party coverage for all business owners to provide coverage for:
- Payments to affected consumers
- Expenses related to liability claims and lawsuit settlements
- Losses related to copyright, trademark infringement, and defamation
- Costs related to litigation and regulatory inquiries
- Costs related to accounting
The FTC cyber security guidelines provide a good starting place for proactive small business cybersecurity insurance coverage. However, cybersecurity and cyber insurance are volatile and dynamic in nature. We’ve built on the FTC security guidelines and included additional tips and tricks from our seasoned insurance experts so you can help your clients stay ahead of the hackers.
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, there are a few key factors that can make all the difference.
The cyber insurance landscape is competitive with differing policy language and coverage options, and varying reputations for claims handling. As such, it’s important to consult with a cyber insurance expert to help you find a policy that is tailored to the specific needs of your clients.
Cyber incidents are often incredibly costly to businesses and many SMBs 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. In addition, 60% of small and medium-sized businesses (SMBs) go out of business within six months of suffering a cyber attack.
At ProWriters, we offer limits of $1-2 million or higher for SMBs and our Cyber IQ Comparative Rate Platform has streamlined the quoting process for up 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.
As an extension of the FTC cybersecurity guidelines, we recommend seeking some additional coverages when choosing a cyber policy. Crime and social engineering is one important example to cover the involuntary parting of funds and voluntary parting of funds.
We also recommend considering business interruption, dependent business interruption, and system failure coverage. These will cover lost revenue that results from a cyber incident and may determine whether or not a business is able to recover from an attack.
Get Started With ProWriters
With a dedicated team of cyber experts backed by 20 years of experience, ProWriters offers superior service and coverage for cyber liability insurance. For more guidance on how to best protect your clients, download our FREE whitepaper, The Six-Step Guide to Becoming Your Clients’ Cyber Expert. Learn how to better identify your clients’ needs and how to find them the best coverage.
For more information about the FTC Security Guidelines or SMB cyber recommendations, speak with a ProWriters expert today.