Why Your Clients Need Cyber Risk Insurance
Why Your Clients Need Cyber Risk Insurance.
Cyber crime is the fastest growing crime in the world. Criminals are exploiting the speed, convenience, and anonymity of the Internet to commit a diverse range of criminal activities. Common types of cyber crime include hacking, online scams and fraud, identity theft, attacks on computer systems, and illegal or prohibited online content.
New technology allows hackers to be even more anonymous and more dangerous when attacking computers, networks, or websites. Hackers understand the intense complexity of the World Wide Web, which changes every day. They know the weaknesses of the common browsers, programming languages, and operating systems. Modern cyber criminals might pretend to be a government agency, bank, or trusted friend in order to gain access to personal information.
According to Lloyd’s of London, cyber crime costs businesses up to $400 billion annually. As cyber crime increases, corporations, government agencies, and other entities will increase spending to defend and protect their digital networks and assets.
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Specialized cyber insurance policies have been developed by insurers to help businesses and individuals protect themselves from an ever-evolving range of risks. Recent market intelligence suggests that the types of specialized cyber coverage being offered by insurers are expanding in response to this fast-growing market need. As an insurance agent or broker, you should educate yourself about cyber insurance to assess the best coverage fit for your clients’ exposure. And all of your clients will have some exposure.
Cyber insurance is an insurance product used to protect businesses and individual users from Internet-based risks, and more generally from risks relating to information technology infrastructure and activities. Risks of this nature are typically excluded from traditional commercial general liability policies or at least are not specifically defined in traditional insurance products.
Most notably, cyber insurance policies cover a business’ liability for a data breach in which the firm’s customers’ personal information, such as Social Security or credit card numbers, is exposed or stolen by a hacker or other criminal who has gained access to the firm’s electronic network. The policies cover a variety of expenses associated with data breaches, including: notification costs, credit monitoring, costs to defend claims by state regulators, fines and penalties, and loss resulting from identity theft.
Specialized cyber risk coverage is available primarily as a stand-alone policy. Each policy is tailored to the specific needs of a company, depending on the technology being used and the level of risk involved. Policies may cover liability arising from website media content, as well as property exposures from:
- business interruption
- data loss/destruction
- computer fraud
- funds transfer loss
- Cyber extortion
Depending on the individual policy, specialized cyber risk coverage can apply to both internally and externally launched cyber attacks, as well as to viruses that are specifically targeted against the insured or widely distributed across the Internet.
Want to know more about cyber risk insurance? Check out our cyber risk insurance continuing education classes.
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