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The Focus is on Cyber Insurance As Smaller Businesses Become Targets


The Focus is on Cyber Insurance As Smaller Businesses Become TargetsThe Focus is on Cyber Insurance As Smaller Businesses Become Targets

Increasingly more and more companies are looking to purchase Cyber Liability insurance as we see a broader scope of industries being exposed to data breaches, increased regulations and smaller businesses as targets. This is reflected by the rise in the number of insurers offering the coverage to address an increased demand. In fact, standalone Cyber insurance is now a $1 billion market. That’s the good news. Unfortunately, there are still too many companies that do not take the threat to their businesses seriously.

Large corporations for several years now have looked to limit their exposure with Cyber Liability insurance. Coverage is purchased to provide protection for data breaches and in some cases the costs of investigating possible breaches and any notifications or computer forensic work associated with those probes. However, as we discussed in a previous blog, small- and mid-sized companies, which are increasingly the targets of cyber crime, have not been protecting their networks and data to the same degree as larger companies. We are beginning to see this change as headlines have focused on data breaches affecting smaller companies and as the insurance industry responds with new products designed for their needs and budgets.

The bottom line is that all businesses should buy some level of cyber liability insurance regardless of the size of a company, as every firm has some level of private information that can be expose them to lawsuits. The key is to develop a strategy to address data protection, potential thefts of that information and any financial and legal ramifications that may arise as a result of a breach, along with the appropriate coverage.

What Cyber Insurance Covers

Cyber insurance provides coverage if a company’s system is hacked and personal or financial data of employees or clients, or proprietary data of business partners, is stolen. Depending on the policy, it will pay for damage awards or settlements plus legal defense bills, forensic investigation costs, notification and remediation expenses. It can also be designed to protect a company against the costs generated by an accidental transmission of computer viruses or other malicious code that harms another party. If private or financial information of others is accidentally released, even if it’s not stolen or used by anyone, Cyber insurance can be written to provide remediation costs that the victims incur for which the company is found responsible.

Some insurers provide crisis management under their Cyber Liability policies, including public relations services, while some also offer cyber security policies, which can help your business if a computer security problem shuts down a company’s network, causes business income losses, or requires rebuilding the software or systems.

At Axis Insurance Services, LLC, we provide Cyber and Privacy & Network Security Liability insurance programs across all industries. Give us a call at (877) 787-5258 to discuss your specific needs.

Sources: WSJ, Property/Casualty 360, Zurich

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Blogged on: February 13, 2013 by Mike Smith
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