Cyber and Tech E&O Insurance During COVID
Having good cyber and tech E&O insurance has always been important, but the pandemic has made this critical. More small business owners and employees are working remotely because of COVID-19, and this remote work often puts a strain on network security. Also, hackers are using the virus as a way to increase phishing, malware, and ransomware attacks. The challenge, however, is that the price of this coverage is increasing. We can help you find the right insurance at the best price.
What is Tech E&O and Cyber Insurance?
Technology errors and omissions policies cover your business for wrongful acts in the delivery of technology services or failure of technology products to work or perform intended functions. Sometimes, exclusions apply because the carrier’s definition of wrongful acts may only include those acts that take place when the technology is offered for a “fee” or exclude services if they don’t meet the represented quality standard. They also sometimes include losses from the transfer of money.
Cyber insurance policies vary widely but, in general, typically provide coverage for data breaches, including standard response costs such as notifying customers and hiring attorneys or forensic accountants; private network security liability; regulatory claims including legal fees related to responding to government inquiries; and costs related to network interruption. These policies also often contain several exclusions, for example, failure of infrastructure, testing or patches, and voluntary shutdowns. They also may limit coverage for owned, operated, or leased systems and those operated by third-parties.
Attacks Are On the Rise
The Deloitte Cyberintelligence Center is seeing a spike in cyberattacks, especially those using the virus as bait. For example, attackers will disguise ransomware as legitimate COVID-19 related apps. Malspams and ransomware are impersonating brands and tricking employees, especially since they do not have IT nearby to answer questions. One common scam is hackers using malware to encrypt a company’s data, then demanding a cryptocurrency payment to provide decryption keys. Another is using fraudulent transfer schemes that lure employees into transferring money to offshore accounts.
Increased remote work also is leading to more employees working from home, which leads to new security protocol challenges. For example, these employees are logging in from home networks that are less secure and sometimes may have transferred personally identifiable information to unsecure devices.
Prices of Insurance Are Rising
The increased security risks are also increasing the demand for Tech E&O and cyber insurance, according to a recent Deloitte survey. The challenge is that the increased demand is not accompanied by an increased supply, driving prices up by as much as 10 percent for those renewing their policies and creating less appetite from insurers to write new policies. Finally, having a large number of employees working from home can affect your cyber risk profile, which, in turn, affects the prices you pay.
Actions You Can Take
First, we advise you to act to mitigate the risk from remote working.
- Re-enforce to employees and other users the importance of vigilance.
- Train employees to recognize specific types of threats.
- Boost and support your technology systems.
- Develop a cybersecurity policy for remote workers.
- Investigate the possibility of employees connecting to applications directly rather than accessing applications by accessing the network.
- Use encryption software.
Secondly, review your insurance coverage to be sure that you know what your insurance covers and move to fill any gaps between what you have and what you now need. Some policies will protect you up to $10 million in data breaches but may not adequately cover risks from remote employee access. Remote work will be around for some time and may even become the new normal. Small businesses should consider modifying their cyber policies to address the emerging risks and focus on policy wording that can make the difference between a loss that is uninsured and one that is covered.
Seek Advice from A Pro
Fortside is an insurance brokerage firm that specializes in helping small (under 50 employees) and startup technology, and consulting firms make smart insurance decisions. We can help you examine how you are operating during the pandemic, then review your coverage to see whether it still fits. We can help you shop around for the right cyber and tech e&o policies to meet your needs. Contact us today.