“Medibank class action launched after massive hack put private information of millions on dark web” – The Guardian
“Data breaches affecting millions of Australians are on the rise, Information Commissioner says” – The ABC
“Commonwealth Bank of Australia’s Indonesian arm hit by cyber attack.” – US News
It’s common to hear of cyberattacks in the news. It’s the attacks at major organisations that reach the news. An attack on a large organisation immediately impacts its service providers, ancillary services and vendors. It puts at risk every entity connected to that organisation.
Most large companies can survive an attack with effective PR agencies, with the ability to pivot to other options and with reserves to stand down for a short period. But cyberattacks do not discriminate and impact all business sizes in all industries. Small and medium businesses rarely have the same reserve. They are impacted the most.
According to the Australian Small Business and Family Enterprise Ombudsman, 43% of all cyberattacks target SMEs, and 60% of these businesses will go out of business within six months. This highlights the critical importance of having a cyber insurance policy to mitigate the financial and reputational damage that can arise from cyberattacks.
What is Cyber Insurance?
Cyber insurance protects businesses from financial losses resulting from cyber incidents. Cyber incidents can include:
- Data breaches
- Network failures
- Other incidents that compromise a business’s cybersecurity.
Cyber insurance policies can provide a range of coverages, including liability coverage, which covers legal fees and damages that a business may be liable for, and first-party coverage, which covers the business’s costs of responding to and recovering from a cyber incident.
Cyber Insurance Can Help SMEs Recover More Quickly from a Cyber Incident
In addition to providing financial protection, a cyber insurance policy can help SMEs recover more quickly. A cyber insurance policy may provide access to a team of cybersecurity experts who can help the business respond to and recover from a cyber incident. This can include providing advice on preventing future cyber incidents and helping the business develop a plan for responding to future incidents.
By providing access to cybersecurity expertise and resources, a cyber insurance policy can help SMEs get back to business more quickly after a cyber incident.
How to Choose the Right Cyber Insurance Policy for Your Business
This can be challenging. Many different policies are available, each with its own set of coverages, limits, exclusions, and definitions.
The types of cyber risks that your business is most likely to face will impact your choice. For example, if your business handles sensitive customer data, look for a policy that provides robust coverage for data breaches. If your business relies heavily on technology, look for a policy that covers network failures.
Another important factor to consider is the cost of the policy. Cyber insurance policies can vary widely in cost, depending on the level of coverage and the size of your business. It’s important to balance the cost of the policy with the level of coverage that it provides. While you don’t want to overpay for coverage you don’t need, you also don’t want to underinsure your business and leave yourself vulnerable.
It is also important to consider the limits of coverage provided by the policy. You will want to ensure the policy provides enough coverage to fully protect your business in a cyber incident. Check how much the length of network downtime the policy will cover.
Finally, it is important to understand the exclusions of the policy. Exclusions are situations or events that the policy does not cover and vary from policy to policy. For example, some policies may exclude coverage for losses related to social engineering scams or phishing attacks; check whether the policy covers damage to hardware.
Select a policy from a reliable source, such as CMX Insurance, which offers a comprehensive cyber liability insurance policy and make sure that you fully understand the terms and conditions of the policy, including any deductibles or co-payments that may apply.
Choosing the right cyber insurance policy for your business can be a complex process. It’s always best to work with a reputable company that specialises in providing such a service, a provider who can help navigate the different options and choose a policy that meets your specific requirements.
This overview has been produced in collaboration with the Founder and Director at CMX Insurance, Cindy Lau, a valued partner business of Equil Advisory and experienced risk specialists with a wide range of insurance solutions for your needs.