The specialty lines division of Liberty Mutual Insurance recently announced that it will offer three new cyber liability products, making it the latest insurance company to get into the cyber liability coverage business. Cyber crime insurance is a relatively new kind of business insurance designed to protect businesses of all sizes from the impact of the theft of financial and personal data from external threats and internal evil-doers.
The trend is in answer to the growth in cyber crimes as hackers become ever bolder. A benchmark study of U.S. companies on the cost of cyber crime issued by the Ponemon Institute in August 2011 found that cyber crimes have become a common experience. A sample of 50 companies in various industries reported that they average more than one successful cyber attack per week – an increase of 44% from the previous year. But this isn’t just something that affects big businesses. In fact, when the companies we trust with our data are breached, average consumers are those most affected both in terms of dollars and time lost.
Norton Symantec reports that in 2010, the total bill for cyber crime footed by every adult online was $388 billion! Direct cash losses were $114 billion, the remainder was assessed in time spent cleaning up the mess. The report goes on to say that 14 adults fall victim to phishers, smishers and other cyber id thieves every second; and if you haven’t been affected yet, Norton claims there’s a 1 in 2.7 chance you’ll be a victim. Most surprisingly, it isn’t just old folks who are being duped; 75% of millennials (those aged 18 to 31) were victimized, versus 61% of baby boomers.
Cyber crime insurance policies can be customized to suit a specific business’s needs. Areas of coverage may include:
- Breach of notice expenses. If your data is breached, you’re required by law to notify everyone affected, an expensive proposition. Not only will you need to send out notices, you’ll also have to set up a call center and provide credit monitoring services. You may also need to pay for an
attorney and foot the bill to investigate what caused the breach. Big bucks.
- Damages and defense expenses. If any lawsuits result from a data security breach or an error or omission on your part, this aspect of coverage will protect you.
- Cyber blackmail. If a hacker decides to hold your website or database hostage, cyber extortion coverage will pay the ransom as well as the cost to track down the hacker.
- Denial of service attacks. Some cyber crime insurance policies will cover the cost to restore your network along with any income lost as a result of the hack.
- Business interruption, data restoration and public relations. This part of the coverage will get you back up and running and pay the cost of professional crisis management to restore your company’s reputation.
- Service provider breach. If your data is stored in the cloud or with some other third party, this coverage will provide some protection if that source suffers a breach.
You don’t need to be a big business to be a victim. If yours is a small business engaged in online or offline retail, distribution, professional services, legal services, tech or IT or manufacturing, you’ve got a big target on your back. Cyber crime insurance can help reduce your exposure to risk.