With major breaches like the Equifax hack occurring more regularly than ever before, a light has been shone on the importance of cyber insurance within the financial services industry. Experts are keeping an eye out on what these breaches mean for fintech and the overall shifting cyber landscape as we look to the future.
In a recent interview for FinTechToday, Doug Friel, Vice President, JKJ Commercial Insurance said, “It’s imperative today that businesses obtain the proper insurance to protect their customers in light of this vulnerable environment. Customers may sleep better at night if they know they are working with a financial institution that communicates their plans if a breach does occur. They may say to their customers, ‘We can still serve you if an attack occurs by shutting down our system and keeping things running either through a backup or duplicate site. Losses will be funded through our insurance company and it won’t hurt our balance sheet.’”
Clauses in cyber insurance liability policies cover anything from the expenses it costs to notify customers of breaches to investigations and forensics costs. Cyber insurance plans also cover business continuity – an essential component of recovering and moving on from large scale attacks like the Equifax breach.
Without a doubt, the trend in cyber insurance is rising, not only in number of policies but also the limits that businesses are purchasing.
“The damages, forensic expenses, and the number of people being impacted by cyber attacks have gone up drastically in the past few years. As a result, the limit of insurance that companies should potentially purchase has skyrocketed too. We’re finding that more businesses may take on a larger retention or deductible to reduce the cost of their premium,” said Friel.
In order to ensure you’re getting the best coverage possible, communicate with your broker the details of your cybersecurity plan – whether it’s double authentication, disaster recovery, or retaining the most sensitive data on-premise – these components are important for brokers to know. Being transparent “not only makes clients feel better about their information being secure, but also allows brokers to buy insurance for them in a more competitive manner,” Friel revealed.
Cyber insurance gives consumers that extra sense of security and in turn, it gives companies a clearer plan that may be communicated to prospective clients and communicate their plan if they do have a breach. This may mean having the ability to shut down a system and use another one, or having the funding to cover the loss through insurance while still being able to serve those who are most important – your customers.