Insight

10 reasons why your business needs cyber insurance cover

7 May 2024
Insight

10 reasons why your business needs cyber insurance cover

Cyber security

1. Cyber crime is the fastest growing crime in the world, but most attacks are not covered by standard property or crime insurance policies.

New crimes are emerging every day. The internet means businesses are exposed to worldwide criminals and are vulnerable to attack 24/7. Phishing scams, ID theft, and telephone hacking are all crimes that traditional insurance policies do not address.

Cyber insurance can provide comprehensive crime cover for a wide range of perils that are increasingly threatening the financial resources of today’s businesses.

2. Systems are critical to operating day-to-day business but their downtime is not covered by standard business interruption insurance.

All businesses rely on systems to do business, from POS software to booking systems. Should a hack attack, computer virus or malicious employee brings down these systems, a traditional business interruption policy would not respond.

Cyber insurance provides cover for loss of profits associated with a systems outage, caused by a “non physical” peril like a computer virus or denial of service attack.

3. Data is one of your most important assets, yet it is not covered by standard property insurance.

Most businesses would agree that data or information is one of their most important assets. It is almost certainly worth more than the physical equipment that it is stored upon. Yet most businesses do not realise that a standard property policy would not respond in the event that this data is damaged or destroyed.

A cyber policy can provide comprehensive cover for data restoration and rectification in the event of a loss, no matter how it was caused and up to the full policy limits.

4. Third party data is valuable and you can be held liable if you lose it.

We hold more data than ever before and often this data belongs to our customers and suppliers. NDA’s and commercial contracts often contain warranties and indemnities in relation to the security of this data that can trigger expensive damage claims should you experience a breach. Increasingly, consumers are also seeking legal redress if a business loses their data. This risk is further heightened if you hold any data on US consumers.

Cyber policies include Data Breach defence costs and awards.

5. Retailers face severe penalties if they lose credit card data.

Global credit card crime is worth over $7.5bn and increasingly this risk is being transferred to the retailers that lose the data*. Under merchant service agreements, compromised retailers can be held liable for forensic investigation costs, payment card reissuance costs and the actual fraud conducted on stolen cards. These losses can run into hundreds of thousands for even a small retailer.

Cyber insurance can help protect against all these costs.

6. Complying with breach notification laws costs time and money.

Breach notification laws are slowly being introduced across many different countries (such as GDPR across UK and EU). These generally require businesses that lose sensitive personal data to provide written notification to those potentially affected. Even though a legal obligation to notify only currently exists in some countries, this is changing and there is a growing trend towards voluntary notification to protect your brand and reputation. Customers who have had their data compromised expect openness and transparency from the businesses they entrusted it with.

Cyber policies can provide cover for the costs associated with providing a breach notice even if it is not legally required.

7. Your reputation is your number one asset, so why not insure it?

A business lives and dies by its reputation. Although there are certain reputational risks that cannot be insured, you can insure your reputation in the event of a security breach. When your systems have been compromised, you run a risk of losing the trust of your loyal customers which can harm your business far more than the immediate financial loss.

Cyber insurance can not only help pay for the costs of engaging a PR firm to help restore this, but also for the loss of future sales that arise as a direct result of customers switching to your competitors.

8. Social media is at an all-time high and so are claims.

Social media is the fastest growing entertainment channel in the world. Information is exchanged at lightning speed and exposed to the world. But often there is little control exercised over what is said and how it is presented, and this can increase liability for businesses who are responsible for the actions of their employees on sites such as LinkedIn, Twitter and Facebook.

Cyber insurance can help provide cover for claims arising from leaked information, defamatory statements or copyright infringement.

9. Portable devices increase the risk of a loss or theft.

The advent of portable devices and the ability (and indeed necessity during the Covid 19 pandemic) to work away from the office has made life a lot easier for many of us. However, this new style of working also means that important and confidential data can be stolen or lost much more easily. A laptop left on a train, a stolen iPad, or a lost USB are all good examples. In addition, the devices are being targeted with a growing number of viruses built just for them.

Cyber insurance can help cover the costs associated with a data breach should a portable device be lost, stolen or fall victim to a virus.

10. It’s not just big businesses targeted by hackers, but small ones too.

Whilst the large-scale hack attacks on the news often involve big companies, small companies are also at risk and often don’t have the financial resources to get back on track after a hacking attack or data loss. In fact, over a third of global targeted attacks were aimed at businesses with less than 250 employees. Cyber attacks are quickly becoming one of the greatest risks faced by smaller companies, making cyber liability insurance a must.

Cyber Insurance can help protect smaller companies against the potentially crippling financial effects of a privacy breach or data loss.

Speak to Vista and not only can we talk you through the pricing, our panel of insurers will also undertake vulnerability analysis of your system.  Thus, even if you don’t buy cover immediately you will be better prepared when an attack comes.  Word of warning too, not all policies are the same and many have hidden restrictions and limits that take away coverage.  As specialists we ensure you get value for money and the right protection.

Email Dan Blake, Head of Private Equity at Daniel.b@vistainsurance.co.uk or give us a call on 0161 393 7111.