Changes in technology, changes in process, changes in cover; why businesses need to understand what cyber insurance covers.
Technology has changed the face of business in Britain. Over the last 20 years, the way we use technology has completely altered and for many of us, has made the way we work unrecognizable compared to how thing might have been back in the 1990’s.
In lots of respects, these changes have been positive. We’re able to use technology to increase our productivity. Whether its email, managing customer data, transacting payments, the world has speeded up. But there are downsides. Notably, legal frameworks can lag behind technology. In the insurance world, new policy types have had to be created to account for new types of crime – notably cyber crime.
In 2015, cyber crime was included in the UK national crime statistics for the first time. The net effect on the statistics was an apparent 107% increase in crime committed. By earlier this year, fraud and cyber crime were the UK’s most common offenses, accounting for 53% of all crime. No wonder, then, insurers have been keen to push cyber insurance policies. There are many examples of situations where our clients need them. But what happens when cyber crime isn’t, actually, cyber crime at all – but a case of good old fashioned fraud?
We’ve come across a couple of examples that merit discussion. As an insurance broker, we’re on hand to offer our clients advice on whether their cover is suitable for their needs. Recently, a couple of BJP clients working in the construction sector have been victims of a very simplistic crime where online payments have been made to third parties posing as genuine sub-contractors awaiting urgent payment. This simple error has unfortunately seen some of our clients lose many thousands of pounds – the largest one was £70,000.
In these cases, the perception was that this would be regarded as ‘cyber crime’. While the clients made the mistake of paying these fraudulent invoices digitally, the digital channel was materially only the vehicle by which the payments were made. The crime itself is really an old fashioned invoicing scam, and the victims paid the money over voluntarily. For this reason, a commercial crime policy, or a crime add-on to a D&O policy would provide the relevant protection. Counter intuitively, many cyber policies exclude cover for the monetary amount from such events. Some cyber policies do allow you to include crime cover, but you have to be on your toes – you’ll have to specifically request it.
Learn how to protect your business from actual cyber crime
The fact that the example we’ve discussed here wouldn’t be covered with a cyber insurance policy doesn’t mean you don’t need cyber cover. Today, most businesses probably do. There are a number of steps that you can take to ensure you are less at risk with regards to the latest high profile cyber attacks, the UK’s National Cyber Security Centre has published a step-by-step guide for system administrators on how to contain the spread of the larger cyber concerns such as WannaCry.
We’re on hand to help. Use our professional knowledge!
Talk to us – we’re here to advise, professionally, in your best interest.
It’s what we do as insurance brokers. Businesses change, and so do business processes. All to us about your specific circumstances and we’ll happily advise you on whether you are adequately protected, or what covers you may need to introduce where your circumstances change.
In addition to preventative steps, many further risks can be insured against, either within your general business insurance, or as a standalone cover. Typical wider cyber insurance policies can also cover the following:
- Network Interruption
- Privacy breach costs
- Cyber extortion / ransomware
- Hacker damage
- Media liability
- Cyber forensic support
- Outsource Service Providers
- Data Protection Fines
- Data Protection Investigation
- Event Management to mitigate reputational damage
If you would like to understand more about cyber exposures or discuss your crime risks, feel free to pick up the ‘phone and give me a call. Dean Spurdens – 0118 979 2121.