Many business people mistakenly think their general liability insurance will protect them in the event of a cyber attack. In most cases, it won’t, and the losses can be devastating. That’s why cyber insurance is important.
It’s vital for brokers to understand cyber risk, a complex type of exposure, and convey risks and solutions to clients. ProWriters™ experts can help you understand risks specific to your industry, your business, your technology usage and more. Understanding risk is step one in protecting your business.
According to Thirdway.org, in the United States, “There are approximately 300,000 reported malicious cyber incidents per year, including up to 194,000 that could credibly be called individual or system-wide breaches or attempted breaches … Attacks cost the U.S. economy anywhere from $57 billion to $109 billion annually and these costs are increasing.” Given this, it’s critical that brokers and clients talk about why cyber liability insurance is important as soon as possible.
Cyber insurance could potentially cover something as calculated and criminal as ransomware attacking a business, or as simple as individual internet use, online commerce, or even personal data exposure from a lost mobile phone. Cyber insurance policies are critical because they provide coverage specific to cybercrime losses.
What Does Cyber Liability Insurance Cover?
Cyber liability insurance is an important type of insurance designed to specifically cover expenses, business losses, business interruption, and fines and penalties should a data breach happen to a business. Cyber liability insurance also protects businesses in the event of a ransomware attack. It is written to cover losses that other policies will not cover.
Who Needs Cyber Insurance?
The short answer: everyone. Every business that uses electronic communication and/or the internet should protect their business from a potentially terrible event that could be very costly and could harm a business’ brand or reputation.
Cyber Risk Is Real
Let’s face it: almost everyone uses some kind of cyber technology every day. In an era when your four-year-old can navigate your smartphone like it’s a toy, email and texting are prevalent, and businesses conduct activity and transactions online, the cyber world is a bustling megacenter of communication and commerce. For criminals, cyberspace is the land of opportunity.
According to the Insurance Information Institute, “Insurance experts now consider the risk of cyber liability losses to exceed the risk of fraud or theft. In this tumultuous environment, your business can take several steps to limit risks, including purchasing cyber liability insurance.”
Are You Among the Most Cyber-Vulnerable?
Even with safeguards in place, cyber attacks will happen. Cyber insurance can help mitigate damages and potentially save businesses millions of dollars. While cyber insurance is necessary for everyone, four sectors are most affected by cyber attacks:
- Businesses taking credit cards or electronic payments
- Medical/healthcare facilities
- Banking/credit/financial institutions
- Business providing professional services
These sectors need to pay special attention to cyber insurance. If you are brokering for clients in any of these sectors, it’s vital that you talk to them about their risks and how cyber insurance can help in the event of a cybercrime. Educate them so they understand that cyber insurance is a specific line intended to protect businesses and individual users from the unique risks and costly losses that occur from cyber activity and/or a breach of technology infrastructure. If your clients are not in these sectors, they still have cyber exposure like ransomware, business interruption, and digital asset damage.
Don’t Let This Happen to You
If you think your business is safe from cyber attacks because you are not in one of the sectors mentioned above, or perhaps because yours is a small business, consider this scenario. Emma and Ally had everything they needed to launch their online fashion business. They had solid funding, a great business plan, skills, and unique products. Of course, they purchased insurance: product liability, general liability, and a business owners policy. But they didn’t know they needed a cyber insurance policy and the cyber risk management expertise like those offered by ProWriters. That mistake almost cost Emma and Ally their business, financial stability, and their dreams.
Just shy of a year after their successful launch, a hacker breached their website and exposed their company’s financial data and credit card data from thousands of customers. Emily and Ally turned to their insurance company to file a claim. They anticipated compensation for business interruption losses, rebuilding their cyber infrastructure, and lawsuits from angry customers. Sadly, they were not covered by their general liability coverage or even their business owners’ policy.
They’re not alone. More and more business owners have received the same devastating news. They think their business liability (or other policies) cover losses and protect their businesses from a cyber attack, ransomware attack, or other online security breach. But, the reality is, they most likely do not. There’s an insurance gap, and too many businesses are slipping through.
Mind the (Insurance) Gap
Smart companies are evaluating risks across their enterprises and creating ways to safeguard themselves. These efforts include conducting cyber risk assessment, training employees in best online practices and how to recognize phishing attempts, creating ransomware-attack procedures, and using sophisticated programs to protect their data. And of course, purchasing cyber attack coverage is very important.
To access a free fact sheet about why cyber insurance is important, and learn more about the ProWriters flexible cyber liability insurance program enter your email address using the link here.