What Are The Benefits Of Cyber Insurance?

Businesses buy fire, theft and property insurance, so why the reluctance to buy cyber insurance? Nik Rawlinson reveals all.

There’s more cyber-enabled crime than all other crimes put together,” said Duncan Sutcliffe, director of Sutcliffe & Co Insurance Brokers. “Yet here we are insuring against fire, flood, burglaries, while only 5% of businesses are buying cyber insurance.”

Sutcliffe admits that it’s a hard sell. Cyber insurance doesn’t cover anything tangible, such as a building, car, or office full of computers, yet the potential for damage caused by a data breach, leak or unauthorised server penetration can be far more serious than the loss of hardware.

“Cyber is an extension to a lot of traditional insurance policies,” said James Brady, head of cyber for specialist insurance provider Hiscox, who has seen increased interest in policies since the introduction of GDPR. He acknowledges that physically focused insurance – against fire or theft of property – is well understood, “yet you’re statistically more likely to make a cyber claim than have a fire… employees are very susceptible to social engineering, phishing attempts, and so on, and that could lead to a claim.”

Buying cyber insurance

Every policy is tailored to the business taking it out, and although the questions asked at the outset will sometimes be determined by turnover (Hiscox is launching a new product in early March aimed at businesses with annual earnings of less than £1 million), the kind of data they handle and the business model also play a part.