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Cyber Risk Coverage Fastest Growing Type of Insurance in America

Florida cyber liability insurance

Cyber insurance is the fastest growing type of insurance in America. Also called cyber liability insurance, this type of insurance is not new – it’s been around for about 10 years. Nevertheless, many business and security professionals do not know it exists.

There were 980 data breaches reported in the U.S. in 2016; the number of records exposed was 35,233,317. (IDT911) Notable breaches in the past include Yahoo, Inc. (1 billion Yahoo users were exposed in 2015), Twitter (passwords for 32M accounts hacked and leaked), Target (affected 40 million customers), eBay (145 million user passwords hacked).

A major hack attack on America’s infrastructure knocked many popular internet services offline in May 2016. The cyber hackers attacked the internet’s “critical infrastructure” which acts like a giant switchboard connecting and directing web traffic. This type of attack is called a “distributed denial of service” (DDOS.) The hacker’s goal was to make the online services unavailable by overwhelming it from traffic from multiple sources. Some of the services attacked included

  • Amazon
  • Twitter
  • Spotify
  • Reddit
  • AirBNB
  • S. Department of Justice
  • SoundCloud
  • Netflix
  • Disqus
  • PayPal
  • Shopify
  • GitHub
  • and more.

Experts reported this attack was likely a probe for possible attacks in the future. DDOS attacks are becoming more common due to the availability and affordability of a launch. Malware and secret botnets can easily be deployed against any target for a very low cost.

Cyber and privacy insurance coverage is increasing in frequency, in part due to these growing cyber security issues. Cyber insurance policies are designed to cover a variety of liability and property losses that may result when a business is attacked. These policies cover the liability issues for a data breach in which customers’ personal data – such as usernames and passwords, Social Security and credit card numbers, and other personal information is exposed or stolen. Other common features of cyber insurance include:

  • notification costs
  • credit monitoring
  • costs to defend claims by regulatory agencies
  • fines and penalties
  • loss resulting from identity theft
  • liability arising from website media content
  • property exposures from:
    • business interruption
    • data loss/destruction
    • computer fraud
    • funds transfer loss
    • cyber extortion.

It is becoming more expensive to deal with data breaches, including the potentially dauntingly large expenses of dealing with mandatory notifications; cyber insurance will become more attractive for many businesses. IBM reports that there are more than 91 million security events per year. It is highly possible that your business could be a target at some point in the future. It is a good idea for businesses to consider cyber insurance. The good news is that cyber insurance has evolved and now covers a broad range of risk levels.

Lanier Upshaw is here to help businesses solve their most pressing problems. To learn more about how we can help find the coverage that’s right for your business, contact us here.