Cyber attacks are on the rise and their impact on businesses can be significant. An August 28 article in FLEET OWNER (FleetOwner.com) titled Considering Insurance Against Cyber Attacks notes that cyber attacks are a growing threat to businesses from both an operational and financial standpoint. While the article is directed at the transportation industry, many businesses face the same risks. Technological advances bring many benefits to businesses but also bring new threats.
The article notes, “Projecting electronic information against attack or theft is becoming a paramount concern among all businesses these days, especially in the transportation industry, which is increasingly reliant on digital connections for a wide range of operations.” Most businesses are not insured against cyber attack. Yet cyber attacks are a very real risk. Fleet Owner notes “It’s becoming more and more common for cybercriminals to use dedicated malicious software to launch attacks on corporations, eschewing widely-recognized malware tools and making it harder to detect and repel intrusions.”
The impact of a cyber attack can be very costly. The article notes that “That’s why insurance is being viewed as a way for businesses to reduce the potential fiscal fallout from cyber attacks… the 2013 Cost of a Data Breach Study conducted by the Ponemon Institute found [the] average cost of a data breach is $188 per compromised record.”
The article pointed to additional costs a business may face as a result of a cyber attack on its data systems.
“From a legal perspective, the loss of that information might result in civil lawsuits including costly defense expenses and the potential for damages.”
“From a regulatory perspective, a data breach may lead to fines, penalties and consumer redress funds.”
Businesses often need to place greater emphasis on data security. And, some businesses are specifically considering adding cyber insurance to their list of insurance coverages. The Fleet Owner article notes “[Some insurance] firms are now offering what’s known as “cyber insurance” as a way to help mitigate losses due to the destruction and/or theft of electronic data by hackers and others.”
To read the entire article in Fleet Owner, click the link below.
Utilizing A Captive To Insure Against Cyber Attack And Cyber Risks
It is difficult to get excited about purchasing additional insurance. For many businesses, insurance is a necessary evil. It is definitely a necessity but can also be viewed as a sunk cost. Owning a captive insurance company gives a business an additional tool to address “non-traditional” but very real risks like cyber attack. A business can purchase cyber insurance from its captive insurance company and simultaneously grow profit in its captive insurance company when claims are low.
Also, because captive profits are at stake, the business has an even greater incentive to take active security measures to reduce the likelihood of cyber attack and other digital threats to business data.
CIC Services, LLC has been helping business owners and professionals own their own insurance company since 2005. Please call me to discuss if a captive insurance company is the right move for your business.