Cyber Liability Insurance for Financial Services - Is it Worth It?

Cyber Liability Insurance for Financial Services – Is it Worth It?

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Having insurance for businesses is nothing new. If you’ve invested your money and time into a venture, you want to minimise all chances of failure, build resilience and ensure it’ll survive amidst disasters. And you’re likely willing to pay a decent amount of money for this. So why would it be any different in the case of Cyber Liability Insurance for Financial Services companies?

Cybercrime today has the potential to completely disrupt a business and cause massive damage in very little time. Plus, the odds of becoming a target are only getting higher, pushing this type of threat to be much more common than natural disasters or physical theft. It is estimated that an astounding 60% of businesses close their doors within two years following a severe cyber attack.

Related Article: Beginner’s Guide to Cyber Liability Insurance for Business

So if you’re still wondering if cyber liability insurance for financial services is worth your money, the short answer is a resounding yes. This article will dive into the essential details, including our recommendations on types of coverage and the best insurance carriers. We’ll also provide a few more reasons you should consider hiring insurance – which will help if you’re trying to convince your Board. 

Read on, and feel free to get in touch if you have any questions!

What is Cyber Liability Insurance, and what does it cover?

Cyber Liability Insurance is a type of private insurance dedicated to covering the financial losses caused by a cyber incident or event, such as a data breach. This type of insurance usually is not included in a general insurance policy, so you must purchase it separately.

A cyber attack could have several financial repercussions, and a good cyber liability policy should cover most of them. Here are a few expenses that a business would have to manage following a severe data breach incident:

  • Cost of downtime
  • Cost of investigation
  • Cost of recovering data
  • Cost of legal procedures
  • Cost of notifying stakeholders about the incident
  • Cost of restoring the personal identities of those affected

Make sure to verify precisely what is covered by your policy before agreeing to it, as they may differ depending on the provider. If you’re in the Financial Services space and do not hold cyber liability insurance, you’d have to deal with all these costs – while dealing with the reputational damage derived from the breach.

Besides financial compensation, the insurance provider commonly offers support and guidance to businesses when dealing with cyberattacks. Plus, they’ll help you investigate and understand how the crime happened in the first place to ensure it doesn’t happen again.

Why Should you Consider Cyber Liability Insurance for Financial Services Companies?

Cyber Liability Insurance for Financial Services is a must today, as it should be for any businesses that deal with personally identifiable information (PII). Cybercriminals are continually looking for ways to steal data, especially the type of data held by finance organisations. That’s why these businesses and professionals are amongst the most frequent cybercrime targets!

Read: Potential Risks that Insider Threats Pose to PII

If you represent a business operating in finance, you’ll likely already be protected by a robust cyber security suite for all reasons mentioned above. Having these layers of defence should make you feel safer when browsing the web, checking emails and communicating with suppliers. You should also have an IT and security partner who provides multi-factor authentication, an impenetrable firewall and continuous monitoring of your network – so what are the odds of actual damage from cybercrime?

Hopefully, if all of these mechanisms are in place, the odds are slim. Slim, but never none

Read: Understanding Cybercrime Against Financial Services Companies

No security strategy can be considered completely flawless, as the scenario we operate today is ever-changing and unbelievably complex. Several vulnerabilities can’t be completely eliminated, as businesses require people to be online and interact with others. Threats based on social engineering, such as phishing and CEO/CFO Fraud, continue to happen despite the security tools employed. Internal risks associated with negligent or malicious employees require training above tools.

Risk can be mitigated, but having a contingency plan in case all goes wrong is just as important as your security solutions. That’s why we always recommend having a Business Continuity Plan and a Disaster Recovery Strategy. Learn more about it here: How Backup and Disaster Recovery Protect SMEs?

The same logic applies to Cyber Liability Insurance for Financial Services companies. It’ll provide security and peace of mind if a cyberattack succeeds in breaching through your defences. It’s the very last line of defence, the one you never want to utilise – as it means your data has already been stolen – but one that you won’t regret having in this situation.

Top Cyber Liability Insurance Carriers & Type of Coverage

Finding the right cyber liability insurance provider is not easy. While most general insurance providers offer broad liability coverage, they don’t always provide comprehensive cyber liability coverage. Choosing an insurance provider rated ‘A’ or higher by the most reputable insurance rating agency is always ideal.

The following insurance carriers are worth considering:

  • Hiscox
  • Chubb 
  • AIG 
  • Travelers
  • AXA XL 
  • AmTrust Financial 
  • Co-Operators

What about coverage? Not all insurance is the same, and you need to know what to look for. Make sure your cyber liability insurance has the following essential coverages:

First-party coverage:

  • Network security and privacy liability: Covers breach response costs like forensic investigations, public relations, credit monitoring, legal fees and fines/penalties.
  • Business interruption losses and extra expenses: Covers lost revenue and added costs to continue business.
  • Digital data recovery and cyber extortion expenses: Covers losses such as ransom paid due to ransomware.

Third-party coverage:

  • Cyber liability: Covers claims of lawsuit expenses resulting from breaches in client systems or networks.
  • Media liability: Covers claims of libel, copyright/trademark infringement, etc., resulting from media use.

Cybercrime coverage:

  • Covers losses from digital theft of money or securities and social engineering fraud

Ready to Get Started?

But remember, just committing to a policy is not enough. You will also have to verify that all boxes are ticked and that your business is compliant with the agreement to make sure your contract is always valid and will, therefore, pay out in the event of an issue.

Suppose your business is not following the recommended procedures for cyber security or doesn’t have the correct efforts in place. In that case, you’re facing the risk of cybercrime and not having the desired coverage. Be sure not to fall in that limbo!

A trusted IT and security partner could simplify this process. If you feel that you’re not receiving adequate care in terms of service, security, compliance or risk management, we can help. Beyond the best security tools available in the market, our team can assist you in training your employees, building a business continuity plan, preparing your disaster recovery strategy and much more. Our goal is to help companies become more resilient and efficient amongst the uncertainties of today’s world.

Get in touch so we can learn about your situation and assist in turning technology into a fundamental enabler for your business. We’ll carefully listen to your needs before proposing a tailored solution based on our many years of experience working with successful financial services firms.

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