Is cyber insurance set to become mandatory for British companies?

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There are several reports currently doing the rounds that imply that cyber insurance policies could be thrust upon UK businesses, rather than it being something they can opt in or out of as it presently is.

Whether or not these rumours are borne of a future reality or not remains to be seen, however talk of this nature puts the subject of cyber insurance back in the spotlight, which is certainly no bad thing.

The talk on the street is that any British firm which uses computers, networks and information technology (which let’s face facts, is pretty much all of them) will be required to arrange suitable dedicated insurance cover so as to protect their interests (financial and ID).

cyber securityAccording to various research, cyber-attacks cost global business some £200 billion annually, with the respected www.insurancetimes.co.uk having compiled evidence to suggest that 60% of SME’s trading here in the UK experienced some form of breach in their existing cyber security in 2015; calculating that the average cost of such compromises being in the region of £75k.

Intonating that cyber-attacks, far from being isolated incidents, are likely to happen ‘when’ as opposed to ‘if’, a firm which publishes information on the individuals, technology and ideas changing the world is amongst those predicting the imminent call for mandatory cyber insurance policies for businesses in the foreseeable future.

With a worldwide increase in cases of hackers gaining illegal access to sensitive customer, client and policyholder data, huge losses in revenue and brand reputation are often a legacy of such nefarious actions, whilst legal measures are often subsequently taken by parties (individuals and organisations) which have been affected, citing the gross mishandling of information in their trust and negligence.

 

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The most commonplace forms of cyber-attacks tend to take the typical guise of ANY of the following examples set about below;

  • Malware – One of the most prolific means of forcing access and extracting highly sensitive information from private accounts online. Malware (‘malicious software’) is a type of software which can essentially gather and steal information from other computers, without either the owner’s knowledge or indeed, consent.
  • Virus – Probably the best known cyber threat to most people – on account of it bandied around on a routine basis – a virus is fundamentally-speaking a computer ‘bug’ which can replicate its original form and multiply on an unprecedented scale; spreading to other computers and networks with devastating speed.
  • Trojan horse – Another example of cyber-attacking which is notoriously difficult to detect, yet has the capacity to steal and destroy core data with fluid impact and far-reaching effects courtesy of code.
  • Phishing – Predominantly targeting email accounts via what’s known as a corrupted link (or URL) to dupe the unsuspecting account holder, phishing is a widespread practice deployed by criminals seeking to access information from innocent parties. In a nut-shell the irreversible process is triggered once the user clicks on said link, causing the computer to crash, or alternatively, encouraging the user to reveal passwords or other sensitive data by masquerading as an instantly recognisable company or service provider they are/have done business with/held accounts with previously/or right now.

Thankfully cyber insurance policies already exist and are widely available to arrange and sign-up to here and now, with cover ranging from anywhere between £100,000 up to £5 million and more (depending on company size/purposes).

Should a data breach occur, or in the event of data being held ransom by a hacker, cyber insurance protection will be able to provide compensation for any loss of income encountered at this time, whilst in addition to this extra features of dedicated cyber insurance afford the policyholder to have repairs to IT networks and infrastructure recompensed.

In addition to this, employees, third parties and competitor businesses directly affected by such criminal actions will normally seek compensation from the company who cyber security has been breached, so with this in mind legal cover (including the provision of solicitor’s costs amongst other key factors) is figured into most cyber insurance packages.

What’s more, cyber-attacks can also severely tarnish the public image of a company (think the recent Talk Talk breach for example), yet with a cyber policy public relations experts will be offered to help rebuild the brand and the public’s perception of, post-breach.