“Cyberattack” has become a term frequently heard in the news. How - ever, what does it mean? And is it something you should worry about? “Cyberattack” is a generalized term for any attempt by hackers to dam- age or destroy a computer network or system, or to steal confidential data. Whether your business is large or small, a cyber liability policy can make the difference between recuperating after a cyberattack or having to close your doors. Below are five contributing factors in the increasing prevalence of cyber insurance. 1. Global Surge in Cyberattacks Less than 50 years ago, cyberattacks were nonexistent; seemingly the imaginings of science fiction. Today, these devastating incidents are a constant threat, and no business is immune. According to a February 2022 article in Fortune magazine written by Amiah Taylor, governments worldwide have seen a 1,885% surge in ransomware attacks, North America has experienced a 105% increase, and the health care industry alone experienced a 755% rise within the past year. Obtaining a cyber liability policy can protect your business, up to the policy limits, for incidents such as ransomware attacks, financial fraud, phishing, social engineering attacks, and business interruption expenses. 2. Hackers Are Targeting Small Businesses When imagining a cyberattack, many will picture large corporations and retail giants to be the prime targets for hackers. What they do not realize is hackers will more often target small businesses, and this trend has been steadily increasing in recent years. Although large corporations present an opportunity for a larger ransom, they are often equipped with tougher security measures and a more knowledgeable IT staff than small businesses, who often have no cyber security measures in place and are most vulnerable. According to the Forbes article, Small Businesses Are More Frequent Targets Of Cyberattacks Than Larger Companies, author Edward Segal states, “on average, an employee of a small business with less than 100 employees will experience 350% more social engineering attacks than an employee of a larger enterprise.” Another troubling fact report- ed by Business.com is the average cost of a data breach to a small business ranges from $120,000 to $1.24 million. On the other hand, the average cyber policy premium for a small business ranges from approximately $1,000 to $10,000, making the investment well-worth the cost. 3. General Increase in Employee Turnover In this post-pandemic economy, employers are experiencing a higher-than-average employee turnover rate. The current job market is incredibly competitive, offering higher salaries, enticing sign-on bonuses, and flexible hybrid working schedules. What many companies do not realize is high employee turnover poses a serious cyber security risk. The continual coming and going of employees enhances the danger of personal identifiable information (PII), personal health information (PHI), and other confidential data to be stolen or transferred elsewhere. This threat is further augmented in companies that allow employees to work from home, away from management supervision, where information can easily be stolen from a company device or transferred to a USB. Therefore, it is crucial for businesses to utilize a cyber policy that includes coverage for Data Security/Privacy Defense, Data Breach Response, and Reputation Risk. Cyber Insurance in 2022: No longer an add-on, now a must-have. By: Ally Musike, MSLS, CPCU, ARM, AAI, Commercial Account Executive
4. New Avenues for Potential Attacks In this ever-evolving, technologically advanced society, hackers are finding new avenues for potential cyberattacks. Now more than ever, sensitive information is stored digitally rather than in paper files. In addition to increasing digitalization, the covid-19 pandemic added yet another layer of complexity when it comes to cyber security. The implementation of remote working, and the usage of remote com- puters, laptops, tablets, cell phones, and even the utilization of social media platforms, all provide unique opportunities for employees to easily steal information, or for hackers to gather sensitive material and company data. While these avenues are generally invaluable to a company, such as allowing employees to work remotely, businesses to remain open, and offering new channels of marketing exposure, they can also leave a company exposed to serious cyberattacks. It has become increasingly prevalent for businesses to speak with an agent to ensure they are properly insured against these risks. 5. Growing Ransomware Demands As ransomware attacks have grown abundant, and hackers have developed more sophisticated attack methods, the cost of ransomware demands has also increased. According to the article, Ransomware attacks, payouts soared worldwide in 2021, published in Cybersecurity Dive, the prevalence and scope of ransomware exploded in 2021. The average ransom payout saw a five-fold increase from 2020 to 2021. Among organizations whose data was encrypted, nearly half paid a ransom to the adversary. Implementing a cyber policy that covers ransomware attacks is critical to the survival of a business following an incident. The costs covered by this insuring agreement include monies paid to meet extortion demands, the cost of hiring computer experts to prevent future extortion attempts, and the expenses charged by professionals to negotiate with cyberextortionists. Cyberattacks can happen to any business, large or small, at any time. A cyber insurance policy has become a must-have as opposed to an add-on for all businesses. Your trusted insurance agent is there for you to discuss cyber insurance or review your current cyber liability limits in your commercial insurance program.
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