Cyber insurance is a must. I am not setting out to deliberately alarm you, but here’s why your business needs protection from a cyber-attack.
The majority of UK businesses are still, despite the massive press coverage, uninsured for the consequences of a cyber-attack. To be fair, a lot of businesses do think they are insured and it’s only in the event of a claim that they discover their fire insurance policy does not cover a ransomware attack.
And the insurance industry doesn’t help because in the example of an “Internet of Things” type attack, that causes your sprinkler system to activate ruining your stock, it probably will be your fire insurance policy which does reply and deal with your loss.
So before we go further we need to clarify what exactly a Cyber Insurance policy is designed to cover and this isn’t straightforward either as there are over 100 policies available in the UK and they all cover different things, which is why you should use a broker who can identify which cyber insurance policy is the right one for you.
The basics of a Cyber insurance policy should;
a) Give you access to specialist services e.g. legal, financial, I.T., communications in the event of you having a data breach
b) Pay compensation to the people whose personal details you’ve allowed to be hacked
c) Pay (where necessary) the ransom to the bad guys who’ve hacked your system and pay for damage to your system in the event of a cyber-attack including the costs incurred in rebuilding your database, records and accounts
d) Cover the costs of being scammed and paying electronic funds to the wrong person and/or sending goods to a fraudster. (This type of cover can be expensive and can be sourced under a specialist Crime Insurance policy albeit with a lot more small print!)
How much cyber insurance should you buy? For starters the size of your business is no guide to how likely you are to be attacked or how much it will cost to put it right. For example, if you’ve gone paperless and are reliant on email, then you are significantly more exposed than a business which uses paper records and relies on dealings over the counter. That’s why getting advice from a broker before you buy cyber insurance is so important.
An example of this is a recent claim submitted to CFC Underwriting, one of the leading Cyber insurers. CFC ended up paying out over £250,000 to rebuild the information contained on a server belonging to a small engineering company with 5 employees and a turnover of less than £1 Million which was destroyed by hackers. That’s when they found out their cloud backups hadn’t been working for over 2 years. Their server held everything, their accounts, their drawings, their tender documents so to save the business. Thank goodness the engineering company had cyber insurance because CFC ended up paying for a team of specialist engineers to redesign all of their products from scratch plus book-keepers, IT forensics etc etc…
Image for a moment that your business became the victim of a cyber-attack. Image the hassle that would cause you. Would your business survive? If you’ve got cyber insurance you’ve got a fighting chance to continue trading.