Coverage Gap Concerns as Cyber Threat Grows – January 2020 RISK REPORT
Small and mid-sized businesses are increasingly bearing the burden of cyber threats, as criminals are betting they do not have the resources in place to mount a strong defense. A severe attack on a small company can incapacitate its ability to do business, and the expenses of getting operations back on track – coupled with loss of goodwill – can easily force a firm into bankruptcy.
Unfortunately, with more data breaches hitting the news, one of the main concerns that executives have is if their insurance will cover the costs of recovering from an attack.
If you are running a small or mid-sized company, do not underestimate the growing threat to your business. Your chief priorities should be protecting against the threat and having proper insurance coverage in place.
TOP REASONS FOR CYBER LOSSES
• Malicious breaches resulting in data losses: 52%
• Unintentional data disclosure by staff: 16%
• Physical loss or theft of data: 13%
• Network or website disruptions: 5%
• Phishing, spoofing and social engineering: 5%
• Other: 9%
Source: Advisen and Nationwide Insurance Co.
One of the chief concerns for executives is any overlap or gaps between their property, liability, crime and cyber policies when it comes to covering the costs of recovering from an attack, according to a report by insurance news website Advisen and Nationwide Insurance. Some companies feel they don’t need cyber coverage because they believe their property and liability policies will cover any related losses.
EXECUTIVES’ INSURANCE WORRIES
• 95% of respondents named data breach as the number-one risk they expect to be covered by a cyber insurance policy.
• 94.5% said they expect cyber-related business interruption to be covered by a cyber policy.
• 89% said they expect their cyber policy to cover ransom demands.
• 36% said they have cyber-related property damage/bodily injury coverage under another policy, reflecting the belief that some coverage for cyber-related losses can be found under traditional policies.
• 60% of respondents said they are concerned about perceived gaps and overlaps in their insurance coverage.
• 53% of respondents said coverage for funds-transfer losses should be found under the crime policy, but also stated they would like to be able to recover under both crime and cyber policies – or have separate policies with higher limits.
Since cyber insurance is a new and evolving product, all policies do not cover the same thing. That’s why it’s important to weigh your choices carefully and consult with us. While the cyber threat grows, more insurers are changing language in their property and liability policies to limit coverage of cyber events. Because of the high costs associated with a data loss, more
executives want to see higher limits for business interruption coverage on their cyber stand-alone policies.
This market demand may drive insurers to refine their cyber insurance policies, including increasing cyber-related business interruption limits, according to the Advisen report. To find the best coverage for your business, please talk to us. We can help you evaluate your risks and coverages and identify any gaps by looking at your existing policies.