The Growing Threat of Cyber Attacks
Here’s some good news and bad news from the world of cyber attacks and cyber liability. First, the bad news. According to Reuters and the insurance business industry, 75% of companies are prone to a cyber attack. We’ve seen that recently with AT&T, the big CDK hack for car dealerships, and even smaller companies are starting to get hit now. Almost any company is at risk of a cyber attack, and for the attackers—the hackers—it’s a numbers game. They send out thousands or tens of thousands of attempted hacks daily at companies to see what they can get away with, to see what companies are prone and vulnerable to attacks. So, expect that your company is going to be vulnerable. Now, what are the odds of you getting hit? Well, that just depends on how prolific the hackers are.
The Insurance Industry’s Response
Kind of good news, kind of bad news is that insurance companies who are writing cyber liability insurance are facing business interruption claims (BI claims). What does that mean? That means that some of these policies, in addition to paying for the hack itself, will also pay for business interruption losses for that business. So, if you have to shut down for a week, if you have to stop selling for a couple of weeks, they’ll pay those. Make sure that if you get a cyber liability policy and you want to have that type of coverage, that your policy has it. Many add-on policies to existing liability insurance policies don’t have BI coverage.
The Cost of Cyber Insurance
What about coverage itself? Well, here’s the really good news. Cyber insurance policies are going down in price. The coverage is being more underwritten by insurance companies. The companies now are understanding the market, even though there are still a lot of claims. They don’t have to price in as much unknown risk as they used to because now they know what the risks are and what the losses are. So, prices are plummeting because there’s also market competition. Part of the reason there’s competition is because insurers have databases now that help understand what their losses could be. So, more companies are stepping in since they know how to price these policies.
