Insurance Springs Up to Cover Small Businesses as They Come Under More Cyber-attacks
By: Business Week September 03, 2014
In light of all the hacker attacks in the news, is there insurance that covers smaller businesses in case of an attack? Yes, there is.
In a survey of 800 members last year, the National Small Business Association reported that almost half had experienced security breaches, with nearly 60 percent of those incidents resulting in business interruption. The average cost associated with cleaning up the attacks approached $8,700.
While more than 90 percent, however, of those surveyed said they were very or somewhat concerned about cybersecurity, one in four reported knowing little to nothing about cybersecurity issues. That may include not be aware of insurance as well.
As it happens, Harris Tsangaris, senior vice president at New York insurance broker NFP, says he has seen an uptick in claims for so-called cyber-liability insurance, as policies intended to cover costs of data breaches are called. “There’s a significant threat of hackers getting into systems and obtaining confidential information,” he says. Cyber-liability insurance covers both electronic hacking incidents and confidentiality breaches that result if your company is not properly disposing of paper files that contain financial information.
Along with the cost of notifying customers (a legal requirement) that their credit card or other data have been stolen, there can be a serious cost to your company’s reputation in the wake of an attack, says Andrew Bagrin, chief executive and founder of cybersecurity company My Digital Shield. “More than one-third of patrons say they wouldn’t return to a business that experienced a breach. Unfortunately, few businesses recognize and understand the impact of a breach until it’s too late,” he says.