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Cyber Insurance

The reliance of modern commerce on information technology has opened up whole new areas of risk.

Business today thrives on the gathering and use of data, digital communication and electronic exchange. The hardware systems we rely on have evolved from basic local systems in the 1980s to the sophisticated web servers of today. CPU speeds are doubling every 18 months. Data growth is forcing ever more complex developments in IT infrastructure.

The advance of cyber commerce is unstoppable. Unfortunately, the advance of cyber commerce means the potential consequences of cyber risk are advancing too. Danger comes from human error and machine failure as well as from malicious or criminal interference. If you hold sensitive customer information, rely on the internet to conduct business or regularly process digital payments, then you will be in the firing line.

Essential peace of mind

Cyber insurance is every bit as important as property, public liability, professional indemnity or credit risk insurance. In fact, it is even more crucial because it interfaces with every area of your business. Events that might give rise to a claim under any of these traditional insurances will very often have a cyber element.

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Your questions answered

What is cyber insurance and why do you need it?

Put simply, it covers losses caused by damage to or loss of information from IT systems. Any use of IT in business exposes you to potential interruption of business, loss of revenue, repair and recovery costs as well as unquantifiable damage to your business reputation. According to UK government figures, in 2018, 61% of corporations and 31% of small to medium enterprises suffered a cyber breach, with average costs exceeding well over £20,000 while for even the smallest businesses, losses ran to nearly £4,000.

What's covered?

Firstly, you can protect your own assets in the event of business interruption, cyber extortion, reputational damage, data breaches and straightforward theft. But importantly, you can also safeguard the assets of others - your customers and clients - for which you can be held liable in cases of negligence, security and privacy breaches, loss of data, defamation and denial of access. 

Cyber insurance provides a means of providing compensation for financial loss, whether incurred through theft or the cost of remedying any damage. It will often provide practical help in the recovery process by offering technical assistance as part of the service your premiums pay for. That can be extraordinarily useful in getting your business back to full operational capacity with minimal delay.

What doesn't it do?

Cyber insurance cannot solve your cyber security issues or prevent any breach or attack. That's why you need to make sure you have the very best cyber security measures in place. In fact, it will usually be a condition of cyber insurance cover that you have taken all reasonable steps to protect your business in the cyber sphere. So the advice is two-fold: make your cyber presence as secure as you possibly can, and consider putting cyber insurance in place for those rare times when even the best security fails.