With businesses increasing moving to the fluid digital landscape, the problems Australian businesses face are also shifting, prompting insurance companies to follow by offering cyber insurance.
Willis Temby Insurance Brokers Executive Director Mike Beaton says cyber insurance is a recent product that has found its way into the market.
“Hackers have become increasingly clever. As most businesses are online in some way, they are exposed to cyber attacks,” he says.
“Cyber insurance is likely to take off in the next couple of years. People will start to recognise that perhaps they haven’t thought about it before and everyone who uses the internet potentially can get hacked.
“This may result in a ransom from the hacker, business interruption or loss of profits. Additionally, as a result of the new Federal Privacy Legislation, you have to notify all your clients that your system has or may have been compromised.”
The Department of Communications and the Arts estimates online criminal activity costs Australian business more than $1 billion each year.
Sixty per cent of these attacks are targeted at small to medium sized businesses.
A cybercrime attack on average costs more than $275,000 and more than half of businesses who experience a cyber attack go out of business within six months.
Businesses can ultimately face:
- remediation costs
- customer notification costs
- hefty fines from regulators
- extortion costs, or
- being sued by customers or employees for loss of personal information.
Carbon Group Authorised Broker Chris Dean says despite this, less than 1 per cent of businesses have insurance in place for cyber attacks.
“Nowadays, it is all about the online world. Businesses rely on the online space more now than ever and cyber insurance is becoming more and more important,” he says.
Beaton says a cyber policy covers business interruption, the cost of advising clients of the system breach and the legal fees and third party loss if a business gets sued.
“So it’s fairly broad and everyone connected online is exposed to it. Not everyone sees this risk until it happens to them, a close friend or a business colleague. Part of our job is to highlight those risks to the client, so they can make an informed decision,” he says.
