Byte Me Article 437 – Cyber Insurance

Do We Need Cyber Insurance?

This week we jump left field and look at a new topic that is still focussed directly on the IT arena, the topic of Cyber Insurance.  Over the last few weeks I have noticed an increase of calls from our customers inquiring about whether they should take up the offer of Cyber Insurance that their brokers are more recently pushing.  So is this scare mongering?

Before we get into any recommendations we first need to outline what this is all about.  Cyber Insurance it designed to cover a business for loss or abnormal expense due to a Cybercrime.  Cybercrimes include the hacking of a website, the spoofing or infiltration of emails, identity theft, intellectual property theft, workstation or server hijacking, telephone phreaking, data deletion or cryptojacking.

Cyber Insurance policies can offer protection from the above by means of reimbursement if it can be proven that the business suffered a revenue drop, increased IT costs to restore them to a ‘status quo’, public relations or crisis management costs, perceptible damage to computer systems and or protection against third party claims.

All the above threats and consequences are real, and these Cyber threats are not reducing but rather getting more complex, well thought out and more regular, so is insurance against these problems warranted?  In the main, if you have a well setup computer network, if you are keeping it up-to-date and well protected and are following the advice of a professional IT group then you should not have problems.

Furthermore if you do have problems then having a proper backup system / strategy should see any loss, disruption or extra expense minimised to levels that would be best described as non-hurtful.  If you are getting serious about Cyber Insurance then you are also saying that you have little faith in your current IT setup and are happy to pay for cure rather than prevention – and the associated headaches of having to weather a hurtful Cyber-attack.

We are of the persuasion that prevention is better than cure and have already seen several Cyber Insurance premiums being charged annually that would have exceeded what would have otherwise been required as a once off expense to sort the customers IT network into a state of sufficient security and restorability.

Now for the disclaimers!  For the majority of businesses we believe Cyber Insurance is scare mongering compared to a proper, secure & restorable IT setup in the first place.  However, if your main business income happens to be through having a large web presence and an ecommerce site then you should consider Cyber Insurance for this facility. 

We also need to point out that our views on Cyber Insurance are limited to that part of the insurance industry only.  We would never be without adequate business and asset insurance coverage and cannot stress enough the importance of having an insurance broker that you can trust. 

Future Byte Me topics can be emailed to [email protected] and Bruce is contactable at Kerr Solutions, 205 Musgrave Street or on 49 222 400.

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