Members Must Remain Vigilant Against Cyber Threats

Reuters recently reported that companies without cyber insurance are going as far as dusting off policies covering kidnap, ransom and extortion in the world’s political hotspots to recoup losses caused by ransomware viruses.

“If your CFO gets kidnapped, the company is going to continue to function,” said Bob Parisi, cyber product leader for Marsh & McLennan Cos. Inc. “If you get a piece of malware in the system, you might have two factories that stop working. The actual damage is probably greater.”

While the U.S. leads the world in buying cyber insurance—nearly 90 percent of the world’s annual cyber insurance premium of roughly $3 billion comes from the U.S. market—there is still work to do.

Tom Franzen, an insurance industry professional who advises the Association’s Risk Management Committee, said he discusses cybersecurity with his commercial clients virtually every day. He said this relatively new threat presents a particular challenge for insurers.

“For the most part, we can identify exposures and ‘maximum probability loss exposures’ based on the traditional perils of wind, fire, even third party claims against the enterprise for things like bodily injury and property damage,” he said. “When we deal with cyber exposures, we are dealing with something that changes continually, which makes it difficult to identify and manage.”

This could be a good time for you and your insurance broker/agent to take a second look at your total insurance package. The Association also encourages you to call Shane Beversdorf at Sentry Insurance. Sentry, an endorsed service of the Association, has answers to your questions. It is backed by some of the most talented underwriters in the industry and has been working with us to manage members’ risks for decades.

Cyber coverage can be added to most policies, but it is important to look closely at more that just cost and policy limits. Consider what’s covered, what’s excluded, and what services are provided to assist you in keeping your business running as you recover.

Contact Beversdorf at (715) 346-6985 or shane.beversdorf@sentry.com.

Beyond insurance policies, Franzen advises companies to prevent cyber attacks by educating employees of the risk and implementing safeguards. He also suggests planning for the possibility of a loss by understanding cyber forensics, legal reporting requirements, and the need for a communication plan when data is compromised.