Cyber insurance is a form of liability insurance that protects businesses in the event they suffer a malicious attack on their computer system, network and data.
Thanks to cloud technology, businesses are now able to avoid the hefty cost of investing in server computers by storing their data online. While this is an affordable, convenient and effective way to store valuable information, it can make businesses more vulnerable to malicious online intrusions or cyber-attacks. This makes it necessary for any business with such vulnerability to have cyber insurance.
First Business Protection has many years of experience in providing small businesses with insurance cover that matches their needs. We now offer cyber insurance cover that is designed to better protect our business clients from the impact of cybercrime.
What is Cyber Insurance?
Cyber Insurance is an insurance policy that protects a business from the impact of a malicious cyber-attack or data breach on their computer systems. It is also referred to as cyber liability insurance and can be used to limit the disruption caused to your business should such an event occur. This policy covers the financial costs associated with having to handle the effect of the attack or threat and the recovery process.
Any business that has online exposure will likely have developed best practices and invested in security measures designed to protect their data and network. However, even with these precautions in place, breaches may still be successful, hence the need for insurance that can provide financial support to set things right. This provides business owners with peace of mind that if they do fall victim to cybercrime, there is financial protection in place that will allow the business to keep running.
How Cyber Insurance Works
Cyber insurance covers the losses a business derives from damage caused to their network or computer systems, or any resulting data breach. With a cyber insurance policy, businesses can access the financial support they need after a cyber attack to restore their systems and cover the loss of income during that downtime. Other costs that may also be covered under this policy include:
- Communicating to clients about the data breach
- Social engineering
- Cost of ransom demands
- Legal costs from liability claims
The media is rife with stories about how major organisations have fallen victim to cyber-attacks. Makes sense when you consider the massive amount of personal and financial data they have collected from their customers. This may suggest that cyber insurance is more beneficial to larger businesses.
The reality however is that even small businesses do fall victim to these attacks. As more small and medium-sized businesses expand their eCommerce footprint, they too have come to accumulate huge amounts of valuable customer data with every transaction. This is data that makes such businesses as much a target as larger organisations. In some instances, even more targeted as hackers know smaller businesses do not invest as much in cyber security.
Why Small Businesses Need Cyber Insurance
SMEs make up 99% of all businesses in the UK. As of 2021, there were 5.6 million SME businesses in the country. This coupled with the fact that SMEs are rapidly adopting internet use and eCommerce, makes this segment of the market a prime target for cybercriminals.
It might seem that just one business being targeted is unlikely to cause much damage. However, as each day passes, more businesses are being hit and the attackers seemingly grow in number.
The reasoning behind targeting a small business is not as farfetched as you might think. Even small businesses will likely have a stash of money or credit lines they access through online accounts, and hang on to the personal and financial data of customers. Customer data is important for marketing purposes and for encouraging repeat business. Hackers will target such data even when it seems you do not have much to protect as it could lead to greater gains for them.
And it does not matter what kind of business you operate, as long as you have data that has value. Whether you are a bakery that saves customer orders including personal contact information and payment details, or you run a small marketing firm that collects and uses client business data for marketing campaigns, any type and size of enterprise can fall victim to cybercrime.
However, in as much as all businesses need to safeguard their data and computer systems and networks, they also have to keep them accessible, whether it is to customers, remote workers or service providers.
Hacking and Ransomware
One of the most increasingly popular forms of cyber-attack against small businesses and individuals comes through ransomware. For this type of cybercrime, access is usually gained through malicious attachments sent by email or drive-by downloading. Once the malware installs, the cyber attacker encrypts the business’s files, demanding a ransom payment before they are given the decryption key.
The amounts demanded are often small, anywhere from a few hundred to several thousands of pounds. While it might not seem like a sizable attack when you consider how many businesses can be attacked in a day, the totals can be staggering.
A 2020 Cisco Small and Medium-Sized Business Report found that 24% of small businesses and 31% of larger enterprises suffered at least 8 hours of downtime due to cybercrime. The losses were more substantial for those that rely on eCommerce. 90% of these attacks are financially driven, with personal data very much being affected. It was also established that though businesses are upping their cyber security measures, cyber attackers are also becoming more sophisticated, meaning the threat is far from reducing.
Choosing your cyber insurance policy
Cybercrime is a growing problem that is being exacerbated by attackers that are becoming increasingly sophisticated in their approach. Most SMEs lack the resources, knowledge and skills to effectively protect their businesses from these criminals. And given how profitable cyberattacks can be for hackers, there is even more motivation on their part to keep at it.
So, it does not matter how big or small your business is, or what niche you work in, everyone is a target. Once an attack is made, it can become quite expensive for a business to recover and seal the loopholes.
With the right cyber insurance policy, your business can quickly get back to normal operations as it will have the financial support needed to cover such expenses as engaging cyber experts to quickly identify the source of the intrusion and make repairs to the system. It can also help in covering any loss of business caused by the attack and expenses related to dealing with regulators and liability claims.
Get in touch with us today to find out more about what cyber insurance your business needs.