Is 2017 the year for cyber insurance?This is the question keeping insurance providers and brokers on the edge of their seats. With the growing rise of cyber-attacks in the UK and US, there have been deep discussions as to whether it should be compulsory for firms to acquire cyber insurance. This will mean every company will need some kind of protection against hacking, phishing, leaking of online details and more. Companies would need to provide documentation of their policies upon request, similar to employer’s liability insurance.
But why cyber insurance?As our society becomes more technology-driven and reliant on computers, there has been a rise in data breaches and cyber-attacks. Yahoo were the latest victim of 2016, with details of over one billion customers leaked, which could cost them millions in potential law-suits. On a business level, 60% of small businesses in the UK experienced some kind of online data breach last year, costing the average firm around £75,000.
The US have already acknowledged the threat, with 46 out of 50 states making it part of their legislation this year. The EU have also been drafting some form of policy, but since the UK are in the process of leaving the EU, this has been “put on hold” and it is uncertain as to whether the UK will be required to follow it.
By having insurance in place, you can attempt to reverse any damages caused by a cyber breach. This includes hiring IT specialists to fix any technical problems and loss of data, paying for legal battles, and even PR to maintain your brand image. Whether it is compulsory or not, a basic policy starts from £15 per month, which is a small investment relative to the potential costs and business disruption.
Given the extent of the problem and potential damage, there is a strong argument that cyber insurance should be a legal requirement. For the UK, it is not a matter of ‘if’ but ‘when’.
Daniel Tannenbaum is a Director at Tudor Lodge Consultants, providing marketing expertise for the insurance and consumer finance industries in the UK