Do You Have Cyber Insurance?

We live in an age of cyber attacks; the result of which could wreck havoc. Here’s what you need to know about cyber insurance.
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Published: Tuesday, November 22nd 2016
General
Technology and social media each play a vital role in modern day life. Businesses use it to connect with new and existing companies, while individuals use it to keep up-to-date with news and their loved ones.

The Phenomenon of Cyber Attacks

With so many people, and things, now connected to the internet, there is an increasing danger of valuable information being stolen during a cyber attack. In fact, if you're a large corporation, it's not a matter of if but when your company will come under attack from cyber criminals. In an effort to combat cyber attacks, company's are increasing and expanding their efforts to improve cyber security using new and innovative solutions. These range from improved data breach prevention techniques to improving managed security services. According to Santam, cyber crimes in South Africa cost companies approximately R5.8 billion in 2014.
“Criminal activity, including hacking, has been on the rise in South Africa, and internationally. These range from Distributed Denial of Service attacks to the hacking of social media accounts. These attacks can have devastating effects on society. As such, businesses and individuals need to protect themselves against the consequences of cyber crime with comprehensive cover,” says Candice Sutherland, Business Development Consultant (Corporate Solutions) at SHA, Santam specialist underwriting manager agents (UMA).

The Risks

Some of the risks that companies face as a result of cyber crimes are:
  • Business interruption
  • System downtime
  • Reputation damage
  • Loss of revenue
  • Litigation from loss of data
As a response to the increased threat of a cyber breach, insurance companies have begun rolling out cyber insurance packages.

What Is Cyber Insurance?

In a nutshell, cyber insurance covers a business's liability for a data breach in which a customer or client's personal information, such as identity number or credit card information, is stolen by the hacker or cyber criminal.

What Is Covered Under Cyber Insurance?

In South Africa, there are a range of companies which do offer cyber insurance, including Chubb, Michalsons and AIG. While there is no standard for cyber insurance, most companies who do offer this specialised insurance tend to offer a combination of first party coverage and third party coverage. While the former covers direct losses incurred by the company, the latter covers claims by clients or partners.

AIG's Offering

AIG offers a great explanation as to what they cover in their cyber insurance policy:
  • Data Liability - covering the damages and defence costs associated with a breach of personal or corporate data.
  • Data Security - damage resulting from any breach of duty that ends in:
    • Contamination by Malicious Code of Third Party Data.
    • Improper or wrongful denial of access by an authorised Third Party to Data.
    • The theft of an access code from premises, Computer System, or employees.
    • The destruction, modification, corruption, damage or deletion of Data stored on any Computer System due to a Breach of Data Security.
    • The physical theft of hardware.
    • Data disclosure due to a Breach of Data Security.
  • Data Administrative Investigation - provides costs and expenses for legal advice and representation in connection with a formal investigation by a Data Protection Authority or other regulator.
  • Notification and Monitoring Costs - provides costs and expenses of the Data User for the legally required disclosure to Data Subjects.
  • Data Administrative Fines - insurable fines and penalties obligated to pay to a government authority, regulator, or data protection authority for a breach of data protection laws or regulations.
  • Repair of the Company’s and Individual’s Reputation - reimbursement of costs incurred in relation to Reputational Damage due to a claim covered by this policy.
While this might not be exactly the same across all cyber insurance providers, there should be a fair number of similarities across offerings and providers. As we approach the festive season and more people shop online (especially in light of local Black Friday deals), company's should ensure that they are keeping client and customer data as secure as possible. And, also, ensuring that, should there be a data breach, they are protected.