How cyber insurance can help protect small businesses from cyber crime

The way we all handle and process data has evolved significantly in recent years. Since the online boom really took off at the turn of 1999/2000, personal data has become one of the most significant commodities in the world. As a result it has also become one of the most targeted and there has been a steady rise in sophisticated cybercrime and data breaches as a result.

In 2021 39% of businesses and 26% of charities reported cyber security breaches or attacks. According to the government’s Cyber Security Breaches Survey 2021 (Page 3), fewer organisations were able to administer their cyber security monitoring protocols (35% in 2021 compared to 40% in 2020) or undertake any form of user monitoring (32% vs 38%).

The most common cyber-attacks are phishing and personal impersonation. 21% of the businesses reporting attacks and 18% of the charities lost money, data or other assets.

“Where businesses have faced breaches with material outcomes, the average (mean) cost of all the cyber security breaches these businesses have experienced in the past 12 months is estimated to be £8,460. For medium and large firms combined, this average cost is higher, at £13,400.” (1) These figures do not consider any penalties imposed for GDPR breaches.

This highlights why it is vital to be vigilant in securing your networks and the data that you handle while following GDPR rules.

Risks of a cyber breach and loss of data

Good practice is important to data management and security to ensure business confidentiality is maintained. The risks of a data breach are not confined to immediate monetary loss, but also include:

• Loss of trust from existing clients = loss of future ongoing revenue
• Damaged reputation = takes longer to win new business and recover
• Negligence claims from clients = damages and compensation payments to clients
• Potential penalties/fines = significant revenue loss.

How can cyber insurance help my business? 

Cyber liability insurance will respond to cover your business if you suffer a data breach during the period of insurance. The policy covers a cyber response service and the cost of notifying third parties and/or employees of an actual or suspected data breach.

As a policyholder you will also benefit from access to a cyber response helpline manned by information security experts, as well as covering you for:

• The costs of restoring data and equipment
• Informing clients of a data breach
• Assistance in the event of a ransom demand
• Loss of your net profit
• Your legal defence costs and damages you are liable to pay to other parties. (2).

There are three levels of cyber liability cover (£50,000 for £40.00 per annum; £100,000 for £50.00 per annum; £250,000 for £65.00 per annum) available online.

Prices and cover correct as of 15.03.2022

Click here to start your online cyber insurance quote

What types of claims does cyber insurance protect against?

Cyber insurance protects against a range of cyber risks, including:

• A spreadsheet containing all your clients’ personal information (including payment details) is stolen by a hacker. You are covered for the costs associated with informing your customers, your legal defence costs, and any damages you are legally required to pay to other parties
• In a targeted attack, a hacker threatens to encrypt the hard drive of the laptop you use for your business unless you pay them a ransom. You will be covered for the cost of meeting the ransom demand
• A targeted denial of service attack causes an outage on your website. You are covered for the cost of restoring or reinstating the data to get your website back online, as well as loss of net profit

Sources:

1. https://www.gov.uk/government/statistics/cyber-security-breaches-survey-2021/cyber-security-breaches-survey-2021
2. https://quotes.caunceohara.co.uk/pdf/policy_pdf/Cyber_Crime_Policy_Doc_June_2021.pdf

Related Articles:

5G and the cyber security challenge

Reducing your cyber risk on the railways

Cyber risk stalks ALL industries regardless of size

Cyber Insurance