The internet is an integral part of our business and personal lives. In 2020 it took on an even more significant role by keeping us connected with loved ones and helping businesses remain operational by making remote work possible. However, our increased reliance on the internet also meant that cybercrimes increased. Police data shows that in the UK during May-June 2020, cyber scams in the UK rose by 31%, with the most common hacking attacks being through email and social media. As we continue to work from home, and as businesses allow remote work to become a more permanent fixture, the need for cyber insurance is greater than ever. Here we will look at Cyber Insurance for business including who it protects and who needs it.
Cyber Insurance for Business
If your business uses software or stores any personal information on computers or internet-capable devices, including client and staff information, cyber insurance is necessary. If the computer system is damaged, lost, stolen or breached, cyber insurance could protect the first party and third parties from financial repercussions.
First party cover
The first party refers to your business, the company who has suffered the attack. Cyber insurance can cover the first party with costs to do with:
- investigating the cybercrime
- recovering any data lost in a security breach
- loss of or damage to digital assets, whether that’s data or software programmes
- theft of money or digital assets through electronic theft
- restoring computer systems, networks and security
- loss of income incurred by the business during network downtime, known as business interruption
- managing the business’ reputation following an incident
- any extortion payments demanded by hackers
- notifying customers of a privacy breach where there is a legal or regulatory requirement to do so.
An extensive cyber policy can also include even further cover, such as education and cyber security training for employees to prevent further cyber attacks, following an incident. Employees must receive regular, up-to-date training on cyber security, as the field evolves rapidly, continually presenting new security risks for a company.
Third party cover
The third-party refers to anybody adversely affected by the breach, which is usually your customers. For instance, a hacker may access your customers’ personal data, in which case you may be liable to pay compensation to your customers, or other damages.
Insurance can cover you for these damages and settlements, as well as the cost of legally defending yourself against claims of a GDPR breach (in most policies, GDPR coverage is additional).
Who needs cyber insurance?
Nowadays, almost all businesses rely on data they store, save or send. If your day-to-day business activities rely on information technology infrastructure in any capacity, you could be vulnerable to cyber-based risks, which may result in financial or reputational loss.
For start-ups and multinational businesses alike, a cyber breach can be devastating. In 2020, there were several notable cyber security incidents. EasyJet was the victim of a sophisticated cyber attack in May (2020), a breach which affected over 9 million customers.
Not only do cyber liability policies offer financial security, but they can also provide much-needed support following an incident, helping your company get back on its feet after a severe breach. For smaller companies, this experience and advice can be invaluable when it comes to recovering from a cyber attack.
Some sectors where companies commonly take out a cyber insurance policy include those in the accountancy, advertising, consultancy, education, law, publishing, recruitment, technology, telecoms and transport industries. However, it can be relevant to almost any company using computing technology. It’s particularly worth considering a cyber insurance policy if your business does any of the following:
- holds sensitive customer details, such as names, addresses or bank details
- relies heavily on its IT infrastructure to operate
- relies on their websites to conduct their business
- processes payment card information as part of its daily business activities.
The costs of a cyber attack can quickly mount up. There may be a whole host of expenses that you hadn’t considered when it comes to a simple data leak or information theft. Not only are digital assets costly to recover, but you need to factor in compensating third-parties for any data protection breaches. Add to this the cost of reinstating security or implementing new security measures, as well as taking into account the revenue you may have lost during the time your business is recovering, cyber insurance has become a necessity for many businesses.
To figure out how much a breach could cost you, you can use an online cyber risk calculator to see how much a cyber breach could cost your business.
Cyber threats continue to grow and evolve quickly. As cyber-attacks become more sophisticated, businesses should take steps to protect and prepare for potential threats. Our team at Cascade Insurance are available to help you find the right insurance and ensure that you understand the details of your cyber insurance. Speak to us on 01233 512548 for help and advice.