Cyber security risks and available insurance coverage

Concern over cyber threats to businesses is on the rise due to an ever changing technological atmosphere which has allowed for greater accessibility between businesses and their clients.  With many businesses offering cloud based data centers which store important and often confidential documents or information, the threat of a data breach is a very real liability for any company.   Many recently have ranked the risk of cyber-crimes or data breaches on par with such insurable risks as natural disasters, fire, and business interruptions.  Perhaps partially due to recent media coverage of high profile data leaks and other security breaches, many companies are seeing data breach/loss as a major issue that can have a large impact when it comes to their business or property association.  Reports are showing that companies have been known to only show interest in cyber liability insurance once a data breach has already occurred.  However, going forward this type of risk needs to be taken into consideration in order to properly cover your business or property association.

As with any coverage, there are issues with cyber liability insurance that have kept some businesses from purchasing it.  Many of the same detriments that plague other insurance policies can deter a business from purchasing cyber liability coverage such as, high premium rates, excessive exclusions and restrictions and uninsurable risks.  In the past, companies may have covered losses connected to cyber security under their general liability policies.   However, in the past few years, insurers have tightened up their policies to exclude coverage for data breaches or cyber security in their casualty and property underwriting.  Insurance underwriters cite a lack of applicable data when assessing cyber security risks as one reason the coverage can be so expensive and elusive.  Other risks such as loss of reputation, intellectual property or network connectivity are even more difficult for underwriters to assess, again due to the lack of applicable data.  There is no doubt however that as our world turns more and more to cloud based data storage and accessibility, the need for risk assessment and coverage in the event of a breach, will only continue to grow.  Insurers are already seeing steady interest in data breach policies, all the while more businesses and property associations continue to implement and rely on cloud based data centers that expose them to such cyber threats.   We can only imagine that data breach coverage will eventually be considered a much more significant part of standard business/commercial property coverage as the digital age continues to evolve.

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