What is it?

Cyber insurance is a policy that is designed to protect your business from digital threats such as data breaches or cyber hacks on your company’s computer systems. In the digital age that we live in today, all business’s no matter what size rely on technology in some form or another for their activities. If so they will be exposed to the risks of business interruption, income loss, damage management and repair, and potentially reputational damage should it’s equipment or systems fail or are interrupted.

What does it cover?

Generally cyber insurance policies cover two entities. Your business (the first party) and everyone your business has dealings with (third parties). In the event of a claim, it covers the financial and reputational costs of both parties, some examples of which are in the below table.

First Party Insurance

Third Party Insurance

·        Business Interruption from network down time. ·        Reputational damage caused by a breach of data that results in the loss of customers or intellectual property. ·        Theft of money or digital assets. ·        Damage or loss of assets such as data or software ·        Customer notification expenses occurred for both legal and regulatory requirements to notify of breaches. ·        GDPR claims ·        Consultancy support

·        Privacy and security breaches, defence and investigation costs and any civil damages awarded. ·        Third party data losses including payment to customers incurred due access issues or failure of systems or software. ·        Multi-media liability, to cover investigation, defence costs and civil damages arising from defamation, breach of privacy or negligence in publication in electronic or print media

 

Do you need cyber insurance?

There are no laws requiring businesses to have cyber insurance. However a study carrier out in early 2020 by the UK government concluded that nearly half (46%) of all businesses suffered security breaches or hacks in the previous 12 months, a figure which gets even higher for large businesses (75%). A separate survey undertaken by Hiscox Insurance at a similar time found that the median losses suffered by companies has risen 600%.

This shows the prevalence of cyber incidents is astonishingly high and unlikely to improve as our businesses become more and more reliant upon technology. For most companies now some form of cover against these issues will be essential to provide financial protection.

How much cover?

The answer to this varies from business to business meaning that there is no definitive answer. Your business will require enough cover to weather a worst-case scenario should you experience a cyber attack or breach. We advise discussing this with an insurance broker who can provide you with the information you require to make this decision and tailor the policy to your specific needs.