Here are two questions every insurance agent should discuss with their business clients: “What is Cyber Insurance, and why do you need it?”
Unfortunately, odds are your clients—especially small-business owners—may not be able to answer those questions. Although ransomware, cyber crime, stolen credentials, and phishing emails pose major threats to even the smallest enterprises, relatively few small businesses carry Cyber Insurance coverage. For example, only 20% of small businesses responding to an Appalachian State University and Selective survey in spring 2021 reported having a Cyber Insurance policy.
Some businesses assume Commercial General Liability (CGL) or Business Owners Policy (BOP) coverages will protect them in the event of cyber attacks. In most cases, they won’t. This reality makes your clients’ need to understand why Cyber Insurance is important all the more urgent.
ProWriters can help you explain to your business clients exactly who needs cyber liability insurance: They do!
No matter their industry or their size, businesses face increasingly complex cyber risks. Understanding these risks and how Cyber Insurance works to protect against them is vital to businesses’ security and success.
Why Cyber Liability Insurance is Important
What is Cyber Liability Insurance? A Cyber Insurance policy covers expenses associated with data breaches and other cyber events.
Cyber Insurance policies provide coverage specific to cyber crime losses. But they can also cover expenses in other situations—for instance, a breach resulting from exposure of personal information on a lost smartphone.
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And who needs Cyber Liability Insurance? In short, everyone. Certainly every business technology and the internet needs these policies. In an age when email is more common than physical mail and transactions occur online more frequently than in person, cyber criminals have no shortage of opportunities to exploit electronic interconnectedness for their own gain.
When carried out against large organizations, cyber attacks make headlines. But small and medium-sized enterprises face as much, if not more, risk.
And cyber events can prove quite costly. The average cost of a data breach now stands at $4.35 million. Now add to that figure the damage dealt to a company’s brand and reputation. The answers to “What is cyber insurance, and why do you need it?” become clear.
Do Some Businesses Face More Cyber Risk Than Others?
Even when businesses have the best cyber security safeguards in place, cyber attacks can and will happen.
No internet-connected organization is immune. But these four types of companies are most affected:
- Companies that take credit cards or electronic payments
- Businesses providing professional services
- Medical and health care facilities
- Banking, credit, and other financial institutions
Your clients may not fit any of these descriptions—though the first two encompass a wide range of enterprises. Even so, they face the risks of ransomware, business interruption, and digital asset damage. “Insurance experts now consider the risk of cyber liability losses to exceed the risk of fraud or theft,” according to the Insurance Information Institute.
Businesses can, however, take several steps to mitigate their risk. Purchasing Cyber Liability Insurance is one of the most important. A Cyber Insurance policy could save businesses millions of dollars, making this coverage a more than worthwhile investment.
Exactly How Does Cyber Insurance Work?
The insurance company issuing the policy pays for the direct and indirect expenses a business incurs due to cyber events. Coverage falls into two categories: first-party and third-party.
First-party coverage can include such direct expenses as:
- Restoring damaged data or recovering lost data
- Paying ransomware demands
- Hiring IT forensic experts to determine how a security breach occurred and what data was accessed, viewed, or exfiltrated
- Rebuilding damaged networks, and repairing or replacing damaged devices
- Recouping income lost during a business interruption
- Notifying customers, vendors, and others whose personal information or other data were affected
- Providing credit monitoring for affected customers
- Running a public relations campaign to restore a targeted company’s reputation
Third-party coverage can include paying such indirect expenses as:
- Legal costs in lawsuits related to negligence, breach of contract, and other claims
- Costs related to network security breaches, such as transmission of malware and viruses
- Regulatory fines and penalties
- Legal judgments
- PCI (Payment Card Industry) penalties and assessments
ProWriters Can Help You Find Cyber Coverage for Clients
Finding and quoting the Cyber Insurance policy that best protects your business clients can be challenging. But ProWriters uses advanced market research tools and ongoing support to streamline and simplify the process.
Providing companies with the right level of Cyber Insurance is vital to their safety and continued success. Be ready to tell them, “Here’s what Cyber Insurance is and why you do need it.”
Download our free eBook, How to Sell Cyber: Big Claims in Ransomware & Social Engineering. It will give you practical guidance for presenting Cyber Insurance policies to your clients. It will also show you how you could build your book of Cyber business more quickly with ProWriters.