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What are Cyber Risks

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Cyber risks are the losses and liabilities that a company may face as a result of using such things as the internet, computer systems and email

 

Examples include:

  • Liability to a third party due to libel contained within an email
  • Liability to a third party due to a virus transmitted by you
  • Damage to your computer network due to a harmful virus or hack
  • Loss of revenue due to downtime of computer systems caused by a virus or hack
  • Theft of your money (or your clients) due to a hack or employee electronic theft
  • Threats or extortion relating to your computer systems

 

Do I need a Cyber Liability Policy?

 

Well....

Traditional property insurances were not intended to protect intangible assets such as data and Intellectual Property. Often these assets are more valuable than the property itself.

Traditional liability insurances will not cover damage to third parties intangible property.

Property, Liability and Professional Indemnity insurances have all introduced virus/cyber exclusions.

 

Who has an exposure?

  • Any company that is engaged in e-commerce
  • Any company that is reliant on computer connectivity for transactions or data exchange
  • Any company which stores information that can be accessed over the internet or intranet
  • Any company that is heavily reliant on email usage
  • Any company who uses technology in any way

 

Potential Claims Examples

 

Third Party Losses

  • A well-known camera company mispriced a top quality digital camera at £100 instead of £329. Not surprisingly, they received over 10,000 orders in a very short space of time. Following press coverage and the threat of legal action, they honoured the contracts which cost them over £2,300,000.
  • A list of more than 1,800 web users and their personal details were left at a dotcom online shopping mall that directs buyers to well-known names such as Boots, Comet, Debenhams and Interflora. On display were users' names, email addresses, postal addresses, gender, and age group. Following the press's investigation, the UK Information Commissioner's Office agreed to act on behalf of the thousands of consumers who had their details exposed.
  • A well-known utilities providers were forced to pay over £200,000 to an ex-employee arising from comments circulated via the internet that breached his privacy.

 

First Party Losses

  • A computer engineer who had been employed to update the computer system of a company was fired due to incompetence. When the company refused to pay him, he hacked into its computer system and deleted their files. It cost the company over £70,000 to rectify the damage.
  • In a recent UK court judgement, it was deemed that there was no cover for a business following a  business interruption loss under their all risks policy, due to the E-Risk exclusion within the policy. The loss was due to the combination of a burglary and a virus. Uninsured losses do not tend to be reported, but the DTI Information Security Breaches survey found that 1% of security breaches disrupted the company for more than a week and a further 1% for over a month.
  • A dismissed IT department employee encrypted the entire database of his previous company and then demanded £1,000,000 in ransom. The company were preparing to call his bluff, when it found out that not only had he actually succeeded, but that it would cost at least £5,000,000 in computer and employee time to undo the damage.

 

For further information on Cyber Liability Insurance please contact Geoff Stanbridge on 01903 608106 or This email address is being protected from spambots. You need JavaScript enabled to view it.

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