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Why brokers need to be protected against cyber crime
The Figures are alarming. Cyber crime costs Australian businesses $4.5bn each year, around 60% of Australian businesses have experienced at least one ransomware incident in the past year, and the average cost of a cyber-crime attack is over $270,000.
And yet it remains one of the least insured areas for small businesses.
Brokers, who store confidential client information and rely on online processes and platforms, are at risk of losing not only that information but thousands of dollars while their businesses recover from an attack.
It can take on average 23 days to get back to normal business after a cyber attack, and often longer, says Michael Gottlieb, founder and CEO of BizCover. And while most aggregators expect brokers to be covered by professional indemnity insurance, cover for cyber liability is not something they require or provide.
“It’s alarming to see how big the risk is and how exposed small businesses are,” Gottlieb says. “Imagine if these stats were the same for theft and break-ins to physical businesses. You could be sure that people would be insuring and protecting their businesses in a hurry.”
A cyber attack or data breach could occur after being hacked, or it could even be the result of something as simple as leaving your company laptop in the back of a taxi.
Gottlieb warns that the theft of data is not the only thing to look out for.
BizCover dealt with a broker who had a malicious code installed on their website. It caused their domain to be blacklisted as their site contained malware and they were no longer able to receive emails from their clients. Reputational damage, loss of earnings and IT forensic expenses meant he was able to claim $17,000 on his cyber liability policy.
“This is a great example of how expensive a simple piece of bad code on your website can be,” he says.
“Imagine if these stats were the same for theft and break-ins to physical businesses. You could be sure that people would be insuring and protecting their businesses in a hurry” Michael Gottlieb, BizCover
“If you use digital platforms, store information on your computer or even use emails, you are a potential target. Cyber criminals and hackers can target your commercially sensitive information, your client information, intellectual property or banking information.
“Businesses need to think about how valuable their data is, how secure their data is and how robust their IT infrastructure is. Do they have a response plan or are their staff trained to spot a threat? The risk is huge and the cost of being adequately covered is comparatively very low.”
Cyber liability insurance is not the only type of cover for cyber crime. Brokers who think they are covered by professional indemnity or public liability insurance may get a rude and costly awakening, Gottlieb says.
Brokers and other small businesses may also think they are protected by firewalls and anti-virus software, but attacks can still happen, and cyber liability insurance will help with the expenses and legal costs associated with these data breaches.
Expenses could include the cost of interruption to the business while its systems are down, and crisis management costs, which could be required to salvage the business’s reputation after a breach. Gottlieb says many insurers will not only cover extortion amounts that ransomware often demands but also help the businesses deal with these threats.
“These threats can be quite scary and serious when they occur, so this help can be vital,” he says. A cyber liability policy will also typically cover notification costs – as certain data breaches must be reported under the Mandatory Data Breach Notifi cation Laws – as well as other legal costs.
A threat that BizCover has seen “alarmingly on the rise” is small businesses falling victim to someone posing as a vendor and sending fake invoices.
The cyber liability policies available through BizCover allow brokers to choose the option to cover for social engineering, phishing or cyber fraud, meaning that if this were to happen to a broker or an employee they could be protected under the additional cover option.
BizCover currently insures more than 1,000 fi nance and mortgage brokers, mostly for professional indemnity.
“We are fi nding that many small businesses are unaware they can cover for cyber attacks, and it’s about educating more people to know it’s an option they can choose to add to their insurance package. For a mortgage broker it can be as little as $50 a month,” he says.