The cyber security industry often talks about the “ever-evolving vulnerability” of computer networks and systems.
The number of tracked data breaches in the United States hit a near record in 2015 at 781, according to the Identify Theft Resource Center (ITRC), a national nonprofit that provides consumer education and victim support for identity theft.
The actual number of attacks is probably much higher, as many breaches fly under the radar because businesses don’t want to draw attention to their financial loss and liability.
The techniques that attackers use to target computer networks are never static, so companies need to continually identify vulnerabilities, create prevention strategies and response plans, and have post-breach policies in place.
Beyond that, more and more companies are exploring the protections offered in cyber risk insurance policies.
Cyber coverage is a relatively new insurance offering, and policies are sold under different names including: cyber risk, network security and privacy.
Because the industry doesn’t yet have a standard form on which it underwrites cyber coverage, it can be confusing for businesses to know which policy is the best for them.
Not all cyber insurance policies are created equal. It’s important for clients to work with a licensed professional to help them tailor the terms and conditions of their cyber policies to their specific needs.
Awareness of different coverage features can help clients get the most bang for their buck with their premium costs.
Some of the basic coverage areas include:
- Theft and fraud coverage
- Forensic investigation
- Network/business interruption
- Data loss and restoration
- Privacy liability
- Notification costs
- Crisis management
- Credit/identity monitoring
A study by cyber risk company NetDiligence found that each cyber-related claim in 2015 cost an average of $673,700 for businesses overall, and that number climbed to nearly $5 million per claim for large companies. The average cost per breached record came to $964.
Should you suffer a breach, it’s important to understand how to ensure your cyber liability claim is covered.
PropertyCasualty360 offers four common reasons why cyber claims are denied:
- Late or improper notification
- Lack of understanding on coverages
- Exclusions within the contract language
- Not involving the carrier early enough
Ultimately, the best risk solution is prevention. Cyber insurance isn’t a substitute for good security, but it helps businesses to navigate through the risk transfer side of technology, and ensures protection against cyber exposures not covered by standard property and liability coverages.
Andrew Mahoney is an insurance advisor and cyber coverage specialist at CCIG.