One of the most crucial aspects for businesses to navigate is cyber insurance. It’s not just about knowing what to cover and why, but also understanding the implications and potential risks that can be mitigated through it.
There’s a common misconception that outsourcing IT Functions to cloud technology and managed IT service providers automatically provides a layer of protection for your business.
Sadly, this is not the case.
Losses involving cloud or other outsourced technology systems now form most cyber insurance claims.
Dual Australia recently shared a case study providing timely insight into the growing trend for cyber insurance claims and how the right insurance policy can mitigate your financial risk.
The Case Study
The Insured
The insured, a management consultancy firm, engaged an IT service provider (ITSP) to provide critical services, including hosting their virtual servers and the data held on those servers.
The Problem
The IT service provider suffered a ransomware attack, causing significant downtime for its customers, including the insured management consultancy firm.
Fortunately, a forensic review confirmed that none of the consultancy firm’s data was accessed or exfiltrated, so the attack resulted in limited legal and regulatory costs.
However, the management consultancy firm could not access its MYOB accounting system and three online servers for an extended time, causing significant interruptions to its business operations.
This incident underscores the potential risks and disruptions that cyber incidents can pose to business operations.
The Outcome
The management consultancy firm had a Cyber Liability and Privacy Protection insurance policy. It included automatic, full-limit coverage for insured losses from a covered incident affecting systems provided to the insured by an IT Service Provider, including Cloud Technology.
This policy was a result of careful consideration and understanding of the potential risks, highlighting the importance of making informed decisions when it comes to cyber insurance coverage.
With the assistance of a forensic accountant appointed under their policy, the accountant calculated the business interruption loss, which refers to the financial loss incurred due to the disruption of business operations, at $88,000.
Based on the forensic accountant’s report, the insurer approved and paid the firm’s claim for $88,000, demonstrating the effectiveness of the cyber insurance policy in mitigating the financial impact of the cyber incident.
Seeking Advice on Cyber Insurance
There are many cyber insurance options available in the market, however, determining which is best suited to your business can be a challenge.
Clear Insurance are insurance experts and can help assess your cyber risks. We will explain what’s available in the market and guide you through the most suitable insurance options for your business needs.
You don’t have to wait until renewal time to make a change to your insurance program.
General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.
Clear Insurance Pty Ltd. ABN. 41 601 916 689. AFSL No. 548953.
