The Shadow Knows: Cyber Insurance Needed for Small Businesses Too

The major data breaches may get all the press – 150 million accounts exposed at Under Armour, 92 million at genealogy firm MyHeritage, 87 million at Facebook, and 145 million at Equifax, the largest U.S. credit bureau, revealing even Social Security numbers.

But that doesn’t mean small businesses are immune to cyber crime.

According to the Insurance Information Institute’s (III) 2017 reportProtecting against #cyberfail: Small business and cyber insurance, insurers foresee substantial increase in coverage among the small business segment, as these companies become aware of the possibilities of liability, especially due to a breach and the resulting response costs arising out of the possession of private data.

According to the III, 10 percent of small businesses have suffered one or more cyber incidents in the prior year, with the average cost of cyber-related losses totaling $188,400. Only about one-third of firms surveyed had cyber insurance, nearly 60 percent of respondents said their company is very concerned about cyber incidents, and 70 percent think that the risk of being victimized by a cyberattack is growing at an alarming rate.

Cyber insurance evolved as a product in the United States in the mid- to late-1990s as insurers have had to expand coverage for a risk that continues to rapidly shift in scope and nature. According to the National Association of Insurance Commissioners, 140 U.S. insurers reported writing some cyber insurance premiums in 2016.

Online criminals keep adapting their techniques and level of sophistication just as quickly as technology evolves.  Convincing oneself that cybersecurity – and the attendant insurance coverage – is not necessary, just because a business isn’t “big enough” represents a bet that could be incredibly costly if lost.  Just because a danger may be hidden in the shadows doesn’t mean it’s not there.

The cyber insurance experts at The Reschini Group can help you fashion a coverage package that makes sense for your business and your budget. Read more and download cybersecurity resources by clicking here or contact us to talk more about this important consideration.

Copyright 2019 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice. To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

A Business Survival Issue: Cyber Security Coverage

Cybersecurity has crossed from being an IT issue to being a business issue, and 2018 promises to see a significant ratcheting up of cybersecurity coverage as a result.

The growing cyber threat and stricter cybersecurity regulations will boost the growth of cyber insurance policies this year, according to industry sources.  According to NetDiligence, whose data is based on actual cyber insurance claims, the average cost of a cyber breach in 2017 was $349,000 for small companies, reaching an average cost $5.9 million for major organizations.

As senior decision-makers understand the level of financial exposure, cyber insurance will need to answer the call more and more.  Allianz predicts that global cyber insurance premiums will grow to $20 billion by 2025, up from around $4 billion currently.

According to a 2017 Ponemon Institute survey, while 87% of companies view cyber liability as one of their top 10 business risks, only 24% admit to having cyber insurance.  That may be due to a lack of clarity about how this coverage works.  Cyber insurance differs from auto or home insurance, where the risks are known and the products haven’t changed that much. It is much more complex and potentially more dangerous than traditional risk.

Organizations need to demonstrate that they have followed best practices to protect consumers and employees. They will also need to shift their approach to cyber-risk management, with a focus on accountability, to identify their threats and insurance needs through a deep technical diagnostic linked to realistic business impact.

The team at The Reschini Group is here to help you assess your need, and assemble the most cost-effective package, for increased cyber coverage to meet your particular situation.

Because it’s not just an IT issue any longer.  Protecting your cyber security is now a front-and-center business survival issue.

Copyright 2018 The Reschini Group

The Reschini Group provides these updates for information only, and does not provide legal advice. To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.


Covering the Recovery: Business Interruption Insurance

By Mike Drew, The Reschini Group

Business Interruption Insurance for Operational Recovery

Through an accident, a fire, a natural disaster – the cause of the event can be any number of things – you have lost your property and inventory required to conduct a profitable business.

As if that weren’t enough of a setback, you quickly come to the realization that, without those essentials, there remains no way to generate future income until your property and inventory can be rebuilt and restocked.

Business interruption insurance replaces revenue lost when a company cannot conduct business after a catastrophic event.  Terms of a specifically written policy determine how much in lost revenue can be provided on a per-diem basis, to cover expenses that may include mortgage and insurance payments, employee payroll, and others.  This specialized segment of insurance coverage can be purchased on an annual schedule, and can extend beyond the timeframe required to repair or replace the directly damaged property.

The key elements of a favorable claims settlement would be the policy language being written broadly enough to cover the business expenses and profits that the owners want covered for the period of time needed to resume normal activities.  Claims are then settled based upon the details in the policy language, so policyholders may prefer very broadly written coverage, sufficient to handle a true catastrophe.

Once a claim is filed, a brief waiting period must be observed after the loss is suffered by the business – think of it as the equivalent of paying a small deductible – before payments to cover any lost revenue can begin.

Any discussion of business interruption, however, must also include a reference to coverage for extra expenses the policyholder may incur beyond normal operating expenses during the period of restoration that reduce the amount of loss-related expenses incurred to mitigate damages.  These “extra expenses” may include generators, temporary office space and computer equipment, overtime wages, employee meals outside of normal workdays, and expediting expenses necessary to speed the replacement of machinery, equipment or other personal property.

Insurance exists to help keep people and their enterprises on their feet, should the unthinkable happen.  Business interruption insurance fulfills that role in striking fashion.  It’s worth the investment, to safeguard your larger investment.

The professionals at The Reschini Group can help talk you through how business interruption insurance can be used to protect your company, including value-add services such as disaster recovery planning and business income worksheets to more accurately plan for a worst-case scenario.  Contact us at 724-349-1300 to set up a time to talk.

Copyright 2017 The Reschini Group


The Reschini Group provides these updates for information only.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.