Page 30 - BusinessWest September 5, 2022

compensate it for the privacy breach.
These are only three of many real-life cases
detailed by the Hartford Financial Services Group as warnings that companies of any kind and any size are vulnerable to cybercrime.
“That’s where insurance comes in, to mitigate the cost of a claim,” said Chris Rivers, senior vice president of Phillips Insurance Agency in Chicop- ee. “Small businesses sometimes feel they have less risk than larger ones, but that’s not the case. Anybody can be hacked and be held ransom or have data get out.”
Breaches can come at all severity levels, he noted, from a simple Facebook hack to an attack that steals credit-card information or Social Security numbers from tens of thousands of consumers.
The Hartford reports that the average cost of a data breach in 2020 was $3.86 million, and the U.S. will account for half of all breached data in the world by 2023, when an estimated 33 billion records will have been stolen by cybercriminals.
One of the more severe types of attacks, those involving ransomware, take place every 11 sec- onds, and the average ransom payment increased to more than $233,000 in 2020. Such attacks result in an average of 19 days of business interruption and downtime.
Again, it’s not just large companies at risk of cyberthreats of all kinds, said Jack Dowd, vice president of Personal Lines and a commercial risk consultant for the Dowd Insurance Agencies in Holyoke.
“The percentage of small businesses that are targeted is significant,” he noted. “A lot of the peo- ple doing this know that a lot of small businesses don’t have the infrastructure in place that a larger
business does and are more susceptible to attack, and that’s why they’re attacking them.
“It’s important to know, if you’re taking credit cards or you have a system where you store any type of sensitive information with clients, you’re vulnerable,” he went on. “We’ve seen them target people who wouldn’t think they’d be typical tar- gets, and your best course of action is to protect yourself as best you can, and
will provide defense and settlement costs in the event a third-party claimant sues the insured over a failure to secure their own computer system,” Dowd explained.
But he warned that these expenses can total much more than the client anticipates. In fact, insurers often include sublimits on certain specif- ic types of losses, and it’s up to the insured party
that would include looking into cyber insurance.”
Costs Pile Up
According to the Philadel- phia Insurance Companies, the average cost of a data breach is $204 per lost record, with more than half of such costs attrib- utable to lost customers and the associated public-relations expenses to rebuild an organi- zation’s reputation.
“
they have less risk than larger ones, but that’s not the case. Anybody can be hacked and be held ransom or have data get out.
Small businesses sometimes feel
That’s one reason why cyber insurance policies cover two distinct classes of loss: first-party and third-party.
First-party coverages include loss resulting from damage to or corruption of electronic data and computer programs; income reimbursement during the period of restoration of the computer system; customer notification, regulatory fines and penalties, and public-relations expenses; and reimbursement for extortion expenses, among others. Third-party coverages, on the other hand, include legal liability for financial damage and privacy violations involving customers, employ- ees, and other third parties.
“Network-security liability is a coverage that
to purchase higher limits.
“A lot of insurance companies give a certain
amount, say $50,000, toward notifying people they’ve been hacked. But the notification costs alone, depending on the size of the client book, could be more than that. Then there’s the cost to rebuild data, the cost to secure their network ... a lot of things go into cyber insurance that people don’t always consider.”
Rivers agreed. “Within the insurance industry, a lot of carriers have thrown in some smaller sub- limits that weren’t there in the past. But you can always buy more, up to what you want.”
It’s easy to see why they would. The Philadel- phia Insurance Companies lists many breaches
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