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The Importance of Cyber Insurance

Businesses now days use the Internet daily. They reach, communicate and complete transactions with their customers online. The online world is part of everyone’s norm. So why not have a risk management plan with cyber insurance?

There are many plans to help cover the cost related to first parties, but there are also other plans that include claims from third parties. Cyber insurance helps organizations bounce back if they fall victim to a cyber attack. As technology continues to advance so does cyber insurance.

Here are the most common cyber insurance compensated expenses:

Extortion and lawsuits– Ransomware is becoming a popular extortion strategy hackers use on companies. Cyber insurance can help cover the extortion cost and any legal expenses associated with your case.

Forensics Investigation– To help better protect your information, your policy could cover the cost of hiring a third-party security firm to begin an investigation. The firm could also work with the FBI to find out how your information became breached, how to prevent it and how to repair the damage. This information will help you and your insurance carrier.

Notifications- In some jurisdictions, it is mandated for companies to pay for credit monitoring for clients whose information could have been or was breached. If you have clients whose information was affected, a cyber insurance policy could cover the cost of credit monitoring for those clients.

Losses- Certain policies help cover monetary loss due to network downtime, data loss recovery and business interruption. Some policies even cover reputation repair and much more.

If you have any questions about cyber insurance give us a call at 405-602-1554.

Cyber Risks Are Shifting

 As cyber-breaches continued to afflict U.S. businesses in 2017, both small and large-sized businesses continue to give data security a big priority. That’s the takeaway from a recent survey by USI Insurance Services.

However, according to its 2017 Cyber Security and Data Privacy Study, the top concern of companies with $100 million or more in revenue has evolved from private data loss or leakage to managing reputational and regulatory risk.

Meanwhile, smaller firms—those with $5 to $100 million in annual revenue—were more concerned about leakage of private data (42 percent of the smaller companies vs. 19 percent of the larger ones). Smaller firms were also more worried about loss of data (16 percent vs. 11 percent) and software vulnerabilities (9 percent vs. 5 percent).

The USI survey shows why companies remain so concerned about cybersecurity. According to the report, companies of all sizes reported incidents in 2018, including data privacy loss, impostor fraud, and ransomware. As a result, many firms have increased their information technology budgets to better manage cyber-risks last year, and a majority of firms purchased cyber-security and data privacy insurance.

In addition, both large and small firms more often develop incident-response and business continuity plans, the USI report revealed.

Based on a survey of 100 decision makers at firms with $100 million or more in annual revenue and another 100 at firms with $5 million to $100 million in revenue, USI’s report painted a picture of escalating cyber-risks for firms of all sizes. For example, it found that 32 percent of smaller entities were victims of impostor fraud, 25 percent suffered ransomware attacks, and 32 percent had a data privacy incident.

One of the more ominous trends is the rise of so-called impostor fraud. This involves incidents of criminals posing as customers, executives, or employees of a target company in order to divert company money to external bank accounts. According to the USI report, large firms that experienced such an attack lost anywhere from $100,000 to $500,000 per incident. Smaller firms lost between $25,000 and $250,000.

Data privacy incidents and ransomware attacks were more likely to occur in large firms, USI found. However, smaller companies were more prone to experience theft of portable devices or hard drives.

Although mounting numbers of firms are now purchasing cyber-risk insurance (91 percent of large firms and 84 percent of smaller ones), significant percentages still found buying it challenging. For instance, cost was a barrier for 45 percent of large firms and 38 percent of smaller companies, while 40 percent of large firms and 43 percent of small ones found it difficult to find policies that fit their needs.

Despite the purchase difficulties, 54 percent of large firms and 24 percent of smaller firms filed a cyber-insurance claim in the past year, with nearly all satisfied with their coverage adequacy (92 percent for large firms vs. 100 percent for small).

The differences between large and small companies were especially apparent in how they prepare for future cyber incidents. For example, 96 percent of large companies vs. 81 percent of smaller businesses have written, detailed incident- response plans, while 84 percent of large vs. 70 percent of small companies have tested those plans. Clearly, smaller companies need to raise their games if they wish to prevent major cyber-incidents in the future.

To review the full text of the USI study, go here.

Sources:

  • USI Insurance Services

 

Article By Harry Lew, Chief Content Writer – retrieved from www.napa-benefits.org

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