Cyber Insurance Myths

Lisa Carter, CEO / Managing Director - Clear Insurance

One of the most crucial aspects for a business to navigate is cyber insurance. It's not just about knowing what to cover and why, but also understanding the implications and potential risks that can be mitigated through it.

There's a common misconception that outsourcing IT Functions to cloud technology and managed IT service providers automatically provides a layer of protection for your business.

Sadly, this is not the case.

Losses involving cloud or other outsourced technology systems now form most cyber insurance claims.

Dual Australia recently shared a case study providing timely insight into the growing trend for cyber insurance claims and how an appropriate insurance policy can mitigate your financial risk.

The Insured

The insured, a management consultancy firm, engaged an IT service provider (ITSP) to provide critical services, including hosting their virtual servers and the data held on those servers.

The Problem

The IT service provider suffered a ransomware attack, causing significant downtime for its customers, including the insured management consultancy firm.

Fortunately, a forensic review confirmed that none of the consultancy firm's data was accessed or exfiltrated, so the attack resulted in limited legal and regulatory costs.

However, the management consultancy firm could not access its MYOB accounting system and three online servers for an extended time, causing significant interruptions to its business operations.

The Outcome

The management consultancy firm had a Cyber Liability and Privacy Protection insurance policy. It included automatic, full-limit coverage for insured losses from a covered incident affecting systems provided to the insured by an IT Service Provider, including Cloud Technology.

The policy was a result of careful consideration and understanding of the potential risks, highlighting the importance of making informed decisions when it comes to cyber insurance coverage.

With the assistance of a forensic accountant appointed under their policy, the accountant calculated the financial loss incurred due to the disruption of business operations, at $88,000.

Based on the forensic accountant's report, the insurer approved and paid the firm’s claim for $88,000, demonstrating the effectiveness of the cyber insurance policy in mitigating the financial impact of the cyber incident.

Seeking Advice on Cyber Insurance

Your insurance adviser can explain the cyber insurance solutions in the market and guide you through the most suitable for your business needs. You don’t have to wait until renewal time to make a change to your insurance program. If you need further information, please contact lisa.carter@clearinsurance.com.au | 1300 721 132