Risk & Business Magazine Jones DesLauriers Insurance Fall 2016 | Page 28

YOU NEED CYBER INSURANCE

BY: IAN MORRIS
PARTNER, ACCOUNT EXECUTIVE,
JONES DESLAURIERS INSURANCE

You Need Cyber Insurance
Are You At Risk?

D

ata breaches are now a
fact of life, together with
taxes and death. How can
businesses better manage
the risks related to data
breaches and reduce the significant cost
that can result from them?

The answer—cyber insurance!
Cyber insurance, or cyber liability, is a
relatively new line of insurance that is
designed to help companies mitigate
losses arising from a cyber-related
security breach or other similar event.

exposure, but they, too, have been victims
of phishing attacks.

Canadian businesses currently purchase
cyber liability insurance.

CYBER FACTS:
A recent risk management survey of
Canadian companies indicated that cyber
liability and cyber loss prevention have
become the number one concern for
Canadian companies in 2016, up from
number five in 2015.

WHAT DOES CYBER LIABILITY
INSURANCE COVER?
There are a variety of policies being
provided by a number of well- and lesserknown insurers. The basic cyber policy
will cover the following losses:

•

Who might suffer a cyber attack?
Any organization that stores and
maintains customer information, collects
online payment information or uses
the cloud should consider adding cyber
insurance to its budget. Also, consider the
proliferation of devices that now connect
to business networks.

THERE ARE
SIMPLY MORE
OPPORTUNITIES
FOR MALICIOUS
FOLKS TO
ACCESS AN
ORGANIZATION’S
ASSETS.
Cyber attacks against all businesses are
increasing. Small businesses tend to
think they are safely tucked away from

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A recent survey of Canadian IT
professionals at mid-sized Canadian
businesses reported that cyber
attacks have increased 17 percent
year-over-year and that 51 percent
of the companies had experienced
the loss or exposure of sensitive
information within the last twelve
months.
Mid-sized Canadian companies
reported that the average cyber
claim in Canada is approximately
$7 million. The average claim
breaks down as follows: cleanup or
remediation ($766,667), lost user
productivity ($950,625), disruption
to normal operations ($1.1 million),
damage or theft of IT assets and
infrastructure ($1.6 million),
and damage to reputation and
marketplace image ($2.6 million).

In North America, cyber insurers
paid over $650 million in cyber losses
in 2015

Worldwide cyber losses exceeded
$445 billion in 2015

In spite of the ever-increasing number
and scale of cyber claims, it is currently
estimated that only 10 percent of

•

Investigation: The insurer will
conduct an in-depth investigation to
determine what occurred, who may
be responsible, how to repair damage
and how to prevent the same type of
breach from occurring in the future.
Investigations are typically done by a
third-party cyber investigation firm.

•

Business losses: Cyber insurance
policies may include as losses any
monetary losses resulting from
network downtime, business
interruption, data loss recovery
and costs involved in managing a
crisis, which may involve repairing
reputation damage.

•

Privacy and notification: Many
jurisdictions mandate notifications
to customers and other affected
parties, which can include credit
monitoring for all customers whose
data was or may have been breached.

•

Lawsuits and extortion: This
includes legal expenses associated
with the release of confidential
information and intellectual property,
legal settlements, and regulatory
fines. This may also include the
costs of cyber extortion, such as
ransomware.

Not all cyber policies are created equal.