What is cyber insurance?
Even though cyber insurance has been around for years, it is only recently making a name for itself. This is because cyber attackers are becoming more sophisticated and creative in their methods with access to more tools.
More insurers are starting to sell it as many organisations rush to protect themselves. However many people still don’t understand what it does.
Simply put, cyber insurance is there to protect you financially when any of your systems are compromised. This can be due to a hack damage to data and software resulting in lost business of breach of privacy. It helps to limit the increasing amount of risks that your business face.
Cyber and privacy policies cover a business’ liability for a data breach in which the firm’s customers’ personal information, such as Social Security or credit card numbers, is exposed or stolen by a hacker or other criminal who has gained access to the firm’s electronic network.
What does cyber insurance cover?
As well as protecting details, cyber insurance can also insure so much more such as:
- Loss or damage to data or software
- Financial loss or interruption to the business due to network downtime
- Threats from third parties to damage or release data unless given money
- Customer notification costs in the event of a security or privacy breach
- Reputational damage following a breach that leads to loss of customers
- Theft of equipment or electronic theft
However it is important that brokers really understand what they are selling. As it is such a new product to many brokers, and may not be a concept they are familiar with then it is easy for them to miss-sell it. This will lead to trouble further down the line for them.
The Markets Response:
Marsh and CyberShield
Many insurers are starting to address the new trend head on, bringing out a range of cyber solutions.
The first was from Marsh who launched their new product CyberShield. It is designed for global mid to large companies outside of the US. The cover level is up to (USD $)500 million which includes:
- Liability to third parties, defence costs and regulatory fines in relation to data breaches; breaches of data protection legislation, including the UAE’s General Data Protection Regulation; breaches of confidentiality agreements; network hijacking; and virus transmissions.
- Business interruption losses stemming from network interruption security failures, system failures, or operational errors.
- ‘Content injury’ liability to third parties and defence costs associated with publishing, broadcasting and/or advertising activities, and website content and/or functionality.
- Payment of extortion demands.
- Payment card industry (PCI) data security standards fines and assessments.
This product means that clients will have access to help 24/7 all year round in the unfortunate incident that that are in crisis.
Arthur J Gallagher
A day later, Arthur J Gallagher announced another bespoke cyber product.
The Gallager’s Manufacturers Cyber Policy covers for damage of property and bodily injury as a result from a control system interruption. This is unlike many other cyber policies. It also covers:
- increased cost of working
- contractual penalties
- contingent direct supplier interruption due to a cyber-attack
In conclusion, every expert highly recommends that any business should invest in some sort of cyber insurance. There are many different policies out there to suit small or large companies. Hacking is on the rise and brings many risks with it.
If you have any thoughts about cyber insurance and whether you think it’s here to stay then let us know in the comments.