Advising Commercial Property Insurance Clients About Cyber Risks
Posted by: Agent Hub
The world of the Internet has created a new type of business risk that clients want to have covered by their insurance. Commercial property owners are becoming more aware of the dangers of cyber attacks. Using the cyber world to illegally obtain intellectual property, including tenant information and strategic plans, has become commonplace in the business world. A data security study showed that about 93 percent of commercial property organizations are aware they may be vulnerable to cyber attack.
Explain that Standard Policies Might Not Cover Cyber Risk
Most commercial property owners understand the importance of their commercial insurance policies and are familiar with how this type of insurance coverage works. They need to understand many standard commercial policies may not cover cyber risks. To protect themselves from cyber risks, they may have to obtain a specially designed cyber liability policy. Insurance underwriters struggle to properly quantify such a policy because there is a lack of actuarial data on the topic. Compensation currently depends on assessments of the risk management and security procedures policyholders have in place.
Clients May Need a Customized Policy to Protect Digital Assets
Because cyber risks are a challenge to quantify, and impacted by a number of known and unknown factors, they are often customized. The size and level of a company’s cyber sophistication will play a major role in the cost and type of policy required for adequate cyber risk coverage.
Clients Need to Analyze the Cost of a Cyber Attack
Many commercial property owners require insurance policies that will cover breaches of security affecting their proprietary data, and these policies should cover any loss of confidential information after unauthorized access to their computer system. Reimbursement for costs associated with a privacy breach should cover providing credit monitoring to consumers impacted by a breach of cyber security, and replacing, updating or restoring electronically stored business assets. Policies should also provide coverage for expenses resulting from cyber terrorism or extortion, correcting billing errors and regulatory compliance.
Clients Need to Have a Disaster Response Plan
Before issuing a cyber risk policy, the insurer may want to see the commercial property owner’s disaster response plan, so the client should work on getting one in place if they have not already. The insurance company might want to evaluate the plan’s network risk management, including protection of physical assets and intellectual property. The insurer will want to learn how a company’s employees and others can access data systems and the antivirus, and anti-malware, software utilized and its update frequency.