Does my business need cyber insurance?

The essence of insurance is the exchange of an unlikely and unquantifiable risk for a small known cost. We understand that most of the perils we insure against are highly unlikely to ever happen, fire, theft, explosion etc. In contrast, the scale, quantity and sophistication of cyber criminals means most businesses are under almost constant threat of some form of cyber event. Indeed, the Government’s most recent 2024 official survey outlines the extent of exposure that businesses face, over 50% have faced a cyber breach or cyber attack event with the number rising to over 70% for medium to large organisations! (source: UK Gov, October 2024). Dealing with the consequences of cyber-crime can be stressful, damaging and expensive. Cyber insurance can ease the financial pain and help your business successfully navigate a cyber-attack.

What are the main Cyber threats?

The cyber threat landscape is constantly evolving, striving to outfox the cyber defence tools at our disposal. The most common attacks are as follows; Malware (often referred to as viruses) can often sit on your system undetected for long periods of time collecting data. Ransomware is a form of Malware that locks down your system or steals data. The cybercriminals then demand a substantial ransom to “unlock” your IT system or return sensitive data. Social engineering is on the face of it less sophisticated but in practice equally damaging. We are all used to seeing the phishing emails and fake calls attempting to trick us into revealing passwords or sensitive data. AI tools are making these increasingly hard to spot and the human element means that even with robust staff training it is hard to be 100% immune. Indeed, we have had three clients in the last 12 months who have fallen victim and inadvertently transferred funds.

How can cyber insurance help?

As with all insurance, the key with Cyber is a policy and wording appropriate to your cyber risk and appetite for that risk. Do you hold sensitive data? Are your IT systems critical to day-to-day operations and customer service? On a basic level cyber insurance can cover the financial implications of an attack. This may include;

• Covering transfer of funds scams.
• Business interruption.
• Paying a ransom.
• Covering the cost of retrieving data.
• Compensation for reputational damage.
• Liability if your loss of data causes damages to a third party.

In addition to the financial cover, some cyber policies also offer excellent support in the event of an attack. For example, Aviva has a 24/7 incident response team with the necessary IT security, legal and PR specialists to help get your business up and running again and manage any ransom negotiations.

Are there any requirements before I take out a cyber policy?

Whilst having a good cyber insurance policy in place should provide a degree of peace of mind it obviously cannot replace your efforts to have robust cyber security in place. Insurers will expect you to have taken all sensible precautions and to that end would be happy to supply risk assessments and guidance on best practice. We can help here – indeed we often liaise directly with your IT provider to save you time and hassle.

Why Pelican?

A number of our team have come from the world of IT and have a good grasp of the threats and solutions in this area. We also have strong relationships with the key insurers in cyber. Finally, of course, you would receive the legendary friendly and exceptional service from the fabulous team at Pelican!