The Growing Need for Cyber Risk Insurance

February 15, 2019

The Growing Need for Cyber Risk Insurance

Technology security concept with connected hexagons and padlocks drawn in blue, dark blue, and grey

In the last three years, there has been an exponential increase in the number of data breaches and cyber attacks reported in the news. The events are both local and international, encompassing all kinds of businesses. Healthcare, governments, and social media giants have all been subject to attacks and loss of personal information. Common elements for a cyber crime include:

  • Data Breach – includes a breach, theft, or unauthorized disclosure of personal information. Personal information may include full name, email, banking information, passwords, client information
  • Cyber Attack – an attempt to damage or destroy a computer network or system with any of the following: malware, spyware, trojans, keyloggers, and more.
  • Personally Identifying Information – means information that could be used to commit fraud or other illegal activity. This may include full name, address, email, credit/debit information, social insurance number, or other sensitive information of the affected individual.

It is crucial to be aware of the risks and understand options to protect yourself.

Canadian Businesses at Risk

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Small and medium sized businesses tend to have a higher risk for data breaches due to lack of training and policy for storing confidential information. You may consider your business too small to be the target of a cyber criminal; however, like many crimes, the path of least resistance is the most desirable. A study conducted by Zogby Analytics in 2017 showed that 29% of small organizations experienced at least one data breach. Small companies are prime targets for data thieves, because their security systems are perceived as less sophisticated than those of larger companies. What types of data breaches can happen to small businesses?

  • Burglars break into an insurance broker’s office and steal laptops and employee records
  • A computer hacker steals hundreds of customer credit card records from an online retail website
  • The theft of a laptop from an accountant’s office exposes the tax records of hundreds of clients
  • Rental applications with names, contact details and Social Insurance Numbers stolen from a property manager’s computer system
  • A nursing home is hacked and loses critical patient information and personal information of family members

Along with learning more about data security, business owners might consider adding cyber risk insurance to their commercial insurance policy. Data breaches are expensive, costing as much as $108 in direct costs and $147 in indirect costs per affected individual according to a 2017 study by Ponemon Institute.

Cyber Crime Risk to Homeowners and Renters

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Computers, mobile devices, and connected technology are valuable benefits to the everyday lives of people. Today, we can connect with friends and family across the country face to face and monitor the temperature of our home from work. These connected systems also create openings for cyber criminals to access your data, steal information, extort money, and commit fraud.

Understandably, people are becoming more aware and concerned about cyber attacks and data breaches at home. If your personal system is hacked, it could create significant expenses and legal requirements including:

  • Damage from cyber attacks
  • Data held for ransom
  • Obligations to notify people whose personal information was stolen
  • Loss from fraud

Homeowners and renters looking to add cyber risk insurance to their home insurance policy can protect themselves from potential losses created by cyber attacks.

Canadian Privacy Law

Additionally, on November 1, 2018, the Digital Privacy Act (Bill S-4) amends the Personal Information Protection and Electronics Documents Act (PIPEDA), making it mandatory for all organizations to report data breaches to affected individuals and the Office of the Privacy Commissioner of Canada. This new law includes individuals, small businesses, and non-profits. Investing in a cyber risk insurance policy can assist with both recovery and reporting costs related to cyber crime.

Launching Cyber Risk Insurance at Mutual Fire Insurance

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As of February 15, 2019, Mutual Fire Insurance offers cyber risk insurance options for both businesses and homeowners. We encourage you to reach out to an insurance broker to get a quote for CyberOne®, Data Compromise, and Home Cyber Protection enhancements.

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