Is Cyber Insurance Too Complicated?

Is Cyber Insurance Too Complicated?

December 11, 2018 The Beacon Blog, Uncategorized 0 Comments

According to Graeme Newman, chief innovation officer at CFC Underwriting, Cyber insurance is relevant to every type of business but the insurance industry needs to make it easier to understand. In an interview with Insurance Journal (edited version online at Newman stated that insurers “over-complicate” cyber and need to explain it to clients in a clear and simple way.

I have read dozens of “cyber” policies in the past ten years and they are complicated. Definitions, exclusions and conditions can be mind boggling to a layman. However, as Newman says the basics can be explained clearly and simply. Here is my version of Cyber Insurance 101:

Why does every company need Cyber insurance?

If your company uses computer technology, you’re at risk. Data breach, business interruption, extortion, social engineering fraud, privacy and security liability, media liability – all threats to a company’s bottom line and reputation.

What does it cover?

Your needs differ whether you’re a technology user or service provider. Over  the years insurers have developed forms to cover different types of risk. You will need one or more of the following coverages:

  • Loss of data.
  • Business interruption.
  • Contingent business interruption covering  service providers.
  • Extortion.
  • Computer fraud and social engineering fraud if not covered by Crime insurance.
  • Errors and omissions liability.
  • Security and privacy liability, with coverage for breach notification expenses.
  • Media or content liability, including intellectual property.
  • Brand protection or crisis management.

An experienced broker such as Beacon can help you choose the best coverage and explain the technical details.

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About the Author

Harry Cylinder

Harry Cylinder, CPCU, ARM has spent nearly fifty years in the insurance industry, the majority of the time as a consultant. He has been employed by The Beacon Group of Companies since 2008, specializing in the review and analysis of property and casualty coverage forms. Mr. Cylinder has been reviewing policy forms as they have evolved over the past decades. In 2008 he published an article in the CPCU Journal which was the first description of cyber insurance coverage for a general insurance audience. Since that time he has regularly written on cyber and other topics for The Beacon Companies’ blog.