DESPITE THE increasing number of claims, cyber is still one of the most underserved areas of the insurance industry.
‘Cyberattack’ has become a commonly used phrase by brokers to describe a data breach. However as cyberattacks are becoming more varied with a wider range of victims becoming targets, exactly what is meant by this phrase and who is potentially at risk?
As most individuals and organizations store information electronically, more people are becoming prone to having their data compromised. In short, if you store any data electronically then you are at risk of a breach.
The need for cyber coverage arose during the 1990s with the growth of internet businesses storing large amounts of sensitive data such as addresses, social security numbers and bank details. As the data grew, so did the need for securing it. Hackers seized this opportunity and were soon able to gain unauthorized entry to online databases.
A cybercrime is not just the illegal access of digital data but the corruption, publication, destruction and extortion of it – and as cyberattacks come in all sorts of shapes and sizes it can make a breach hard to recognize.
Identifying a cyber threat
As the term ‘cyber’ has become more recognizable in its own right, it has established a vocabulary all of its own.
A ‘data breach’ is when secure data is compromised by a hacker which could be stolen, corrupted, or sold to a third party.
‘Identity theft’ is when personal information, such as bank details or an address, is stolen or cloned, potentially resulting in theft of funds or fraud.
‘Phishing’ is a type of scam, usually via a spoof email, that attempts to trick people into disclosing personal information, such as addresses and banking details. This may result in data being wiped, corrupted or altered, such as passwords, log-in details or personal files.
A ‘virus’ is a commonly used term to describe the variety of malicious software used to infect networks and drives passed on through suspicious downloads and corrupted files, ie malware, adware, spyware, ransomware and trojan horses.
Victims of cyber
Large organizations and businesses are traditionally the primary targets of hackers. As holders of large amounts of confidential information, all it takes is for one weak entry point to become vulnerable to cyber criminals.
However, while hackers mainly target large businesses, SMEs and even healthcare organizations have also become recent victims of cybercrime. Small businesses also hold large amounts of confidential data, and are less likely to spend money on security controls and encryption than a larger business – therefore making them easier to hack.
Once a breach has occurred it may cause a significant amount of damage to the credibility of the company concerned. Confidence may be lost if companies cannot be trusted to encode and store data securely enough, resulting in a loss of business or further lawsuits. Hackers may also cause other damage such as impersonations in order to give out false or defamatory information to deliberately compromise the reputation of a company.
Protecting you and your client
As new types of cyberattack occur every day, it is important for insurance companies to keep their policies relevant and up to date. Many clients could miss out because not every eventuality has been considered or potential risks sufficiently covered when a new type of attack is reported.
Brokers also need to ensure that their clients are taking enough precautions in order to prevent a cyberattack.
Important questions to ask include: What sort of response is in place in the case of a data breach? Is the security software kept up to date? Are there large amounts of confidential information stored? What sort of back-up system is there and will it store the information using a separate server?
Choosing cyber coverage
Cyber can be divided into major components: first party coverage and third
party coverage.
First party coverage is aimed at clients who want financial protection if their systems have been breached. Third party coverage concerns lawsuits from those who may sue a business or individual if they fail to store their data securely or if there are any communication liability issues.
The risk areas that are part of a typical policy include protection against a business interruption, financial loss and loss of earnings, privacy liability, first and third party notification costs, technology errors and omissions, multimedia liability and legal expenses.
Finding cyber products
As one of the most underinsured risk areas, brokers across Canada are gradually realizing the potential of this still underserved area.
The number of cyber-related products has risen dramatically over the past several years, yet many brokers are still struggling to educate themselves on what is available, as well as how to cover their clients correctly.
Due to the rapid emergence of this risk area, research for what is currently available is more complex through traditional print directories or previous relationships with favourite insurance companies. As new products are created and updated all of the time, a solution is needed to source these new policies as quickly and efficiently as possible.
One such solution is Insurr, a new online resource for specialty insurance products. As an online directory this free-to-use website allows brokers to search for those unusual and hard-to-place risks. Announcing ‘cyber’ as its most popular search term, Insurr features over 260 individual cyber-related product listings.
With new products added on a daily basis, a live chat facility and instant updates to product listings, Insurr has quickly become the most up-to-date and comprehensive resource available for specialty insurance brokers. Placing a cyber risk for even the most under educated broker is now as easy as a price comparison search on Google. Featuring top-level details in a standardized format, Insurr is able to display a wide range of results instantly compared with what would previously have taken hours of research.
Brokers can sign-up to Insurr for free at www.insurr.com/ca for immediate access to the large number of specialty products, including cyber.
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