By: Cindy Klatt, CIC, CRM, CWCA, Chief Operating Officer at Kemmons Wilson Insurance Group
Believe it or not, cyber insurance was a novelty 20 years ago. Since then, technology has advanced, and so have the risks associated with using it.
For instance, the COVID-19 pandemic led many hotels and resorts to rely more on digital check-in and check-out procedures as well as digital room keys. While this emerging technology is convenient and efficient, it exposes hotels to even more opportunities to be breached.
The pandemic also forced many businesses to work remotely, opening more pathways for cybercriminals. In fact, estimates show that there were 192,000 coronavirus-related cyberattacks per week in May 2020 leading to a $137,000 increase in data breach costs in the United States.
It’s not IF you will be breached, but WHEN
Businesses often overlook their exposure to cyberattacks and legal obligations to protect the private information of their clients and customers. The recent cyberattack against Colonial Pipeline reminded us of the growing threat that cybercrime poses to businesses of all types and sizes. Experts predict cybercrime will cost the world $10.5 trillion by 2025–yiikes!
The bottom line is that simply having a website or storing sensitive data, such as customer credit card information, makes you a target for cybercriminals. And trust us, the consequences of a data breach are no joke.
Data breaches cause crippling consequences for businesses
Data breaches cause revenue loss, reputation damage and sometimes the loss of intellectual property, not to mention the extensive costs of recovering from the breach. Investigation expenses, PR services, and legal fees add up quickly. The global average cost of a data breach is $3.86 million — just one lost or stolen record costs the business an average of $150. Plus, can you believe that it takes 280 days on average to identify and contain a breach?
Because cybercrime is inevitable and detrimental, we recommend protecting your business with cyber insurance.
Protect your business with cyber insurance
Cyber insurance covers your business’ liability for a data breach involving sensitive customer information, such as Social Security numbers, credit card numbers, account numbers, driver’s license numbers and health records.
Basic elements of cyber coverage
In the event of an attack, a cyber insurance policy generally helps with:
- Legal representation and expenses
- Forensic expenses for discovery
- Customer/client notification expenses
- Credit auditing and ID theft repair for affected customers
- Public relations expenses
- Liability and defense costs
Read the fine print
It’s important to note that cyber insurance is often excluded from or limited by a general liability policy. General liability policies may give businesses a toss in cyber insurance, but the coverage often evaporates quickly when you experience a breach. Don’t get fooled into thinking $50,000 is enough!
Similarly, franchised hotels often assume they are covered by the franchisor’s cyber policy when they are not. Check the cyber contract between the franchisee and the franchisor to make sure your entity is covered.
Managing cyber risk exposure
Cyber insurance policies are not one-size-fits-all and can be tailored to manage the specific exposures your business faces. At Kemmons Wilson Insurance Group, we partner with reputable carriers in order to offer our clients the best cyber coverage possible. For example, one insurance carrier may offer a policy with more benefits and services while another insurance carrier offers a higher deductible. We will help you determine which policy is right for your business.
Additionally, we encourage our clients to consider including policy-holder tools such as pre-breach consulting and post-breach planning. These tools equip our clients with procedures to protect sensitive information from a breach as well as an action plan to react to a breach in an effective manner.
Due to the prevalence of cybercrime, we expect an uptick in cyber claims and cyber insurance policy purchases, which will likely drive premiums up 20-30 percent. We also predict underwriting regulations to tighten in the next few years. Now is the time to assess your cyber insurance policy!
Consult with your Experts in the Unexpected
Kemmons Wilson Insurance Group is here to help you assess the cyber risk your business faces and tailor a cyber insurance policy that puts preventative measures in place and mitigates the consequences of a cyberattack. Contact us today to learn more.