In an increasingly digital age, it should come as no surprise that cyber insurance has become an important consideration for the business community. This is particularly relevant in the current business climate with the increased cyber risks which have come from Covid-19 as the global pandemic has seen an increase in people working from home, a reliance on cloud based software and a surge in online retail practices. These new challenges have left businesses exposed to cyber-attack which has the potential to have a significant financial impact on businesses of all sizes. With this in mind, it’s become increasingly important for organisations to consider having separate cyber insurance cover for ongoing peace of mind.
What is cyber insurance?
Cyber insurance is designed to protect businesses and individuals from financial losses related to internet based risks related to information technology activities and infrastructure. This could include losses to your business, your customers or other third parties. This type of insurance cover is typically not included in standard business insurance packages and requires specialist cover. With the threat of cyber-crime being a reality for Australian businesses of all sizes, many organisations have fallen victim to criminal activity such as computer hacking, ransomware and data theft.
What does cyber insurance cover?
Cyber insurance can help cover financial loss associated with:
- Loss of revenue due to interrupted business;
- Crisis management and monitoring;
- Theft, hacking and denial of service attacks;
- Failure to safeguard data;
- Defence of legal claims;
- Misuse of intellectual property online;
- Liability following loss of third party data;
- Hiring investigators;
- Copyright infringement;
- Recovering or replacing records or data;
- Public relations costs.
The cover you require will depend on the needs of your business and your broker will be able to arrange specific cover for your unique cyber risk exposures.
The cyber insurance market
While cyber insurance has not been adopted as widely as other insurance policies such as life insurance or motor vehicle insurance, there are a number of reasons why this form of cover is becoming increasingly profitable across the insurance sector. One of the main reasons why the cyber insurance market is becoming more popular across business is that there is an increased awareness regarding the cost of cyber-crime. For example, a 2013 report indicated that the global cost of cyber-crime was approximately USD $445 billion each year. With these costs only expected to risk, particularly in the wake of Covid-19, and greater insight into the financial implications of a data breach, the high cost of cyber-attack is having industry wide implications.
Given its niche application, it is considered that cyber insurance will grow at higher rates in comparison to other insurance products as a diverse range of industries adopt this form of cover. When considering the growth of cyber insurance, it’s important to remember that cyber-crime does not just apply to developed countries. Developing countries are also targets for cyber criminals which means that cyber insurance has applications on a global scale.
The future of cyber insurance
As cyber criminals evolve and use increasingly sophisticated methods to exploit cyber vulnerabilities, so too will cyber insurance evolve to protect against these exposures. One of the biggest challenges facing the cyber insurance industry is how to measure the cost of cyber risks. With a vast range of potential risk exposures, it can be difficult to predict, track, measure and prevent cyber risks. This will be an ongoing challenge for the industry and will involve insurers having good knowledge of the individual businesses they provide with cyber insurance to ensure that their needs are met.
When it comes to potential data breaches and other risk exposures, the focus will need to continue to be on businesses taking preventative measures to ensure that cyber risks are reduced. When a cyber-attack does occur, increasingly targeted cyber insurance coverage will be in place to minimise potential financial loss. Insurers will continue to balance the cost of premiums with emerging cyber risks to ensure the longevity of the cyber insurance market.
Safeguard your business against cyber risks
At GSK Insurance, we understand the risks Australian businesses face when it comes to cyber-crime and have seen the impact this has had during Covid-19. Our experienced brokers will get to know your business and provide tailored insurance solutions to ensure that your cyber risk exposures are covered. No matter the size of your business, GSK Insurance Brokers can help.
For more information about how we can help protect your business against cyber risks, speak with GSK Insurance Brokers today.
The following sources were used in the preparation of this content: