Scroll down

It pays to have Cyber Liability Insurance


Cyber Liability Insurance is developing into an important line of cover for modern businesses of all types and sizes.  It is an evolving product and the number of insurers offering this cover continues to increase. Unsurprisingly the scope of cover offered by these insurers varies widely leading to some press comment that cyber policies are not fit for purpose and that cyber insurance claims are not getting paid. 
At Franklands Insurance & Risk Management we continue to review the Cyber Liability Insurance offerings currently available and will help address these misconceptions.

Cyber Liability Insurance is developing into an important line of cover for modern businesses of all types and sizes.  It is an evolving product and the number of insurers offering this cover continues to increase. Unsurprisingly the scope of cover offered by these insurers varies widely leading to some press comment that cyber policies are not fit for purpose and that cyber insurance claims are not getting paid.

At Franklands Insurance & Risk Management we continue to review the Cyber Liability Insurance offerings currently available and will help address these misconceptions by listing below a few of the important cover extensions available from some of the more comprehensive policy providers.

We don’t need Cyber Liability Insurance as we have strong systems and sound risk management

The majority of cyber liability claims follow incidents originally caused by some kind of human error.

Cyber events caused by human error are not covered

Cyber Liability Insurance was primarily developed to deal with malicious cyber events but policies now go far beyond this covering a wide range of losses caused by human error, or oversight, such as lost laptops or social engineering scams.

Cyber events caused by an outsourced technology provider are not covered

Most cyber insurance policies will cover cyber events and system downtime experienced by the insured themselves and at least their third party technology service providers, if not the full supply chain encompassing non-technology service providers too. In addition, data hosted with third parties is also typically covered.

Cyber events caused by a contractor are not covered

Just as with outsourced technology providers, several policies will cover claims caused by third party contractors and cover a policyholders’ data wherever it is hosted and whomever it is breached by.

Only the legally required costs associated with a data breach will be covered

Should a cyber event lead to a privacy breach, there are policies that will pick up the costs associated with regulatory fines and penalties, breach management like the production and posting of letters, post-breach remediation, and crisis communications, even if you are voluntarily notifying customers.

System interruption cover will only cover the period of actual system downtime

As business interruption can affect a business well beyond the period of actual system downtime, some cyber insurers will offer a three or six months indemnity period to pick up losses incurred in the long aftermath of a cyber event, possibly with an option to extend, and some will even offer 12 months.

If a system has been recently updated, it won’t be covered

Systems updates often improve security and there are cyber policies available that will not exclude events arising out of systems that are new, or recently updated.

It is difficult to get cyber incident support and notify claims

Cyber events are often targeted out of office hours as the perpetrators may consider that this provides a greater opportunity of maximising their gain.  Quick and proactive incident response is key to containing the loss to a business and the subsequent cost of a claim.  It is therefore in the interests of insurers to encourage quick and easy engagement with policyholders if a cyber event occurs. Many insurers make reporting a claim as easy as possible through 24/7 hotlines and the like.

In the event of a cyber incident, businesses cannot choose the IT, legal or PR specialists they work with

Many insurers offer policyholders quick and easy access to panel incident response partners, but some will allow their policyholders to work with their own providers.

Cyber insurance doesn’t pay out

Cyber insurers most certainly do pay valid claims. At Franklands we are seeing an increase in the frequency and cost of these claims and our insurers are meeting their obligations.

Take-up of this valuable protection amongst SME businesses remains low, possibly due to lack of appreciation of the cover provided, or misconceptions around policy response. Choosing the most suitable cover available requires the assistance of an Insurance Broker that understands your needs and is sufficiently expert in the sector.   Contact the team at Franklands on 01332 545720.

Source:  Financial Times 25/01/2019

               Cyber breaches expose the limits of the insurance market

 

 

 

 

 

 

 

 

 

 

Sign up for our newsletter

Get social

Quality insurance, expert advice - call us for your FREE no obligation review on

Tel: 01332 545720