Cyber Liability Insurance in Australia

So what is Cyber Security Insurance?

Cyber insurance, sometimes referred to as cyber liability insurance or cyber security insurance, is designed to protect your business from financial loss resulting from a cyber incident. It covers a range of costs that can arise from cyber attacks, including data breaches, hacking, and other forms of cybercrime. The aim is to provide financial support and resources to manage and recover from these incidents.

Cyber crime is no longer new news, and small businesses are not immune to the likelihood of cyber attacks. That is why Cyber Insurance is an important cover to consider for any small business with a digital footprint. According to Insurance Council Australia (https://insurancecouncil.com.au/issues-in-focus/cyber-risk/) , in 2017 alone there were 4 billion individual data breaches globally, estimated to cost ~US$439 million.

What does Cyber Insurance cover?

While all products are different, in Australia, generally a cyber liability policy includes coverage for:

• Forensic Investigation

  Identifying the cause and scope of a cyber incident requires specialized expertise. Cyber insurance policies cover the costs of forensic investigations conducted by cybersecurity experts. These investigations help determine how the breach occurred, the extent of the damage, and the necessary steps to prevent future incidents.

• Data Breach Response

  One of the primary coverages under a cyber insurance policy is the response to data breaches. This includes costs associated with investigating the breach, notifying affected parties, and offering credit monitoring services to victims. Given the strict data breach notification laws in Australia, this coverage is crucial for compliance and maintaining customer trust.

• Cyber Extortion

  Cyber extortion, such as ransomware attacks, can paralyze a business's operations. Cyber insurance policies typically cover the costs associated with dealing with these attacks, including ransom payments (subject to legal limitations) and professional fees for negotiating with attackers. This coverage ensures that businesses can respond quickly and effectively to extortion demands. Insurers would normally appoint professionals to assist you with this process which alleviate the stress off you.

• Public Relations and Crisis Management

  Maintaining a company's reputation is critical after a cyber-attack. Cyber insurance often includes coverage for public relations and crisis management services to help businesses manage the fallout from a cyber incident. These services are designed to restore customer confidence and mitigate damage to the business's brand and reputation.

• Third-Party Liability

  If a cyber incident affects third parties, such as customers or business partners, the affected business may be held liable. Cyber insurance provides coverage for third-party liability, including legal costs and settlements related to claims made by third parties. This coverage is essential for protecting businesses from lawsuits and financial losses arising from third-party claims.

• Social Engineering Theft (Optional Cover)

  Social engineering is a technique used by cybercriminals to steal company funds. This is normally an optional cover under a cyber insurance policy to include social engineering theft cover. Think of this as a modern day crime policy. Instead of physically coming through your business’ front door to steal your funds, a threat actor would pretend to be your customer or supplier, fraudulently obtaining the funds by tricking you to transfer funds thinking it is a legitimate payment.

• Contingent Business Interruption (Optional Cover)

  Contingent Business Interruption covers you the impact on business cost caused by an interruption to your business directly arising from an outage at your external suppliers’ business due to a cyber event at their premise. There is normally a period of time after the first interruption happened where there will be no cover to you which is also known as the excess period.