What is Cyber & Data Risk Insurance?

Cyber insurance is a type of cover that provides protection and support to businesses in the event of a data breach or if they are suffering from a cyber-attack or hack.

According to a UK Government report into cyber attacks, almost half of businesses (46%) and a quarter of charities (26%) reported having cyber security breaches or attacks in 2019. 

Action Fraud, the UK’s national reporting centre for fraud and cyber-crime, says that one in four small businesses are affected by fraud every year, with costs estimated at £18.9 billion across all sectors. With the average cost of cyber security incidents for small businesses reaching over £3,000, it pays to be protected.

Cyber insurance can help you manage the situation by using trusted and experienced incident responders who will help you unravel the severe challenges made by the attack. They will help you manage the communication with your customers, suppliers and the Information Commission Office. 

All these parties need to be informed if a breach occurs or their data has been compromised. Working closely with insurers will have major benefits and can also reduce the risk of a fine by the Information Commission Office, who have the power to fine up to 4% of your turnover.

Cyber insurance can also help you to minimise disruption to your business by offering financial support and helping with any legal ramifications.

Do I need Cyber Insurance?

The Government’s National Cyber Security Centre advise for small or medium-sized enterprises that there is around a 1 in 2 chance that you will experience a cyber security breach, and that the average cost to the business is around £1,400*. Both of these figures are on the rise.

All businesses have some level of dependence on technology and with ever-expanding use of social media and development of IT systems this is increasing over time. As a consequence businesses are exposed to the risks of business interruption, income loss and reputational damage in the event of a data breach or ‘hack’ which can take time and expense to recover from.

Is cyber insurance worth it for small businesses?

You are 3 times more likely to suffer from a cyber-incident than a theft. Organisations must have the ability to respond and defend against evolving threats to their business. 46% of UK businesses have reported cyber security attacks or breaches; how would you cope if it happened to you?

You should consider this insurance, whether you are a large or small business, if:

  • You have a company website or use any other online platform for the running of your business;
  • You hold information or data on suppliers, employees or sensitive customer data (for example names, addresses, email addresses or banking information);
  • You are reliant on computers to conduct your business;
  • You take card payments or make payments electronically.

Insurance types

Stanmore Insurance Employer Liability Insurance

Employers Liability Insurance

Provides you with cover against claims from employees

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Stanmore Insurance Property Damage Insurance Cover Icon

Property Damage Insurance Cover

Make sure your business can continue if the worst happens

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Stanmore Insurance - Public Liability Insurance Icon

Public Liability Insurance Cover

Cover all kinds of claims made in a wide variety of work environments

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Stanmore Insurance Professional Indemnity Insurance Icon

Professional Indemnity Insurance Cover

Provides cover to pay for legal costs and expenses if a customer claims.

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Stanmore Insurance - Commercial Financial Crime Insurance Icon

Commercial Financial Crime Insurance Cover

Protect your company against direct losses that could occur due to the theft of money

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Stanmore Insurance - Directors & Officers Insurance Icon

Directors & Officers Insurance Cover

Liability cover that protects a company’s directors, senior management and other key personnel

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Stanmore Insurance - Business Interruption Icon

Business Interruption Insurance Cover

Insures you against losses of income that could occur if you were unable to trade due to an unexpected event

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What does this insurance cover?

Most insurers can look to tailor cover to meet different business requirements and will include both first party and third party covers. Cyber Insurance cover typically includes:

Data Protection and Cyber Liability:

Third Party liability claims following a security failure. This could result from confidential information being breached, for example. Cover can also extend to defence costs and some insurable fines. Some insurers include defence against allegations of non-compliance with GDPR within their cover.

Business/network Interruption Cover:

Getting your business back up and running with business interruption cover, for cyber incidents, including loss of income and mitigation expenses.

Cyber Extortion Cover:

Cyber criminals can use ransomware to encrypt data and withhold it from you until a payment is made. The costs incurred as a result of this, including any ransom paid and the services of specialist extortion advisors, can be included. 

However, it is worth mentioning that insurers prefer not to pay the ransom so will work closely to find alternative means to get the business up and running again.

Event Management:

Following a cyber-attack, there will be a variety of services needed to get back on track. This insurance can pay:

  • PR costs to protect a business’s reputation;
  • The cost of notifying those whose data has been compromised;
  • Cost of forensic investigations;
  • Credit monitoring;

 and certain other legal or IT costs that could arise.

Dependent Business Interruption Cover:

Your supplier’s systems and services can be just as valuable. Cover can be extended to include losses and mitigation expenses following a security or system failure from an outsourced service provider.

Beyond this, other covers can also be incorporated such as Digital Media Liability, Financial Crime/Fraud, Property Damage and Telephone Hacking.

How to reduce the chances of cyber crime in your business

No matter how much a business invests in security, their IT systems will never be 100% secure. Even if your IT is outsourced, it’s likely that you will still be held liable. With that being said, there are ways that your exposure can be reduced. These can include:

Staff / User Training

A report in 2018 noted that 67% of cyber claims involved an element of employee error. It’s important that staff understand their role in keeping the business secure and that hacking techniques are developing all the time.

Monitor Portable Devices

Most businesses now allow some element of remote working, with staff being able to access work emails and files on mobile phones or laptops. As their devices are portable, there is always a risk that they can be misplaced or lost, which may open up systems to potential hacking.

Avoid Public Wi-Fi

More and more locations are offering public Wi-Fi, which although may be seen as helpful and convenient, you should always be mindful that anything you do on public Wi-Fi is not secure.

Cyber Essentials Scheme

This is a government-backed scheme designed to help businesses safeguard against cyber threats, and certification is available once completed. This program outlines the basic steps your business can make as you begin to protect yourself from cyber threats.

Cyber Insurance with Stanmore Insurance

You will never be able to completely protect your business from cyber criminals; the world we live in is changing so rapidly that it is almost impossible to keep up with changes in hacking techniques and technologies.

If you were unfortunate enough to become a victim of a cyber-attack, having the right insurance in place means the attack is unlikely to have a long term effect on your business. Your insurance will also ensure that you are supported throughout. 

All of the Account Handlers at Stanmore have expert knowledge in all areas of insurance and can help you make an informed decision based on your personal preferences. We believe in really getting to know our customers; that’s why we provide customers with a dedicated account handler, who’ll get to know you and your business on a one-to-one level.

If you are not sure what insurance you may need, get in touch and we can conduct a free of charge audit on your existing policies and advise of additional covers and adjustments to consider.

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