Top 5 Reasons Businesses Need Cyber Insurance

Despite Cybersecurity being a fundamental concern in today's digital age, many businesses have a false sense of security when it comes to their technology and networks. Unfortunately, people often underestimate the extent of their business' vulnerability until it's too late. With technology constantly evolving and the diverse range of cyber threats, trying to achieve a Fort Knox standard of cybersecurity can present a moving target.

With technology powering everything from transactions to customer interactions, the threat of cybercrime looms larger than ever before. In this landscape, one thing is clear: safeguarding your business with cyber insurance is no longer optional, it's essential.

Here are 5 reasons businesses need Cyber Insurance:

1. Cybercrime is the fastest growing crime in the world, with 43% of cyberattacks targeting small businesses

In Australia, the numbers speak for themselves: a staggering 94,000 cybercrimes were reported in 2023 alone, marking a significant 23% increase⁴. However, experts estimate that the true figure could be as high as 300,000 incidents per year⁴. Fuelled by advancements in AI, cybercriminals are becoming more agile and sophisticated by the day, reducing the time to execute an attack from weeks to mere days.

While headlines may be dominated by high-profile corporate breaches, it's small businesses that are heavily targeted. In fact, a startling 43% of all cyberattacks target smaller enterprises². Cybercriminals aim to exploit the vulnerabilities of companies, prioritising weaknesses over size. Given that many smaller organisations are limited in their IT security resources and knowledge, it makes them the perfect target for all kinds of cyberattacks.

2. Most standard business insurance and property insurance will not cover losses affected by cyberattacks

There are many unforeseen costs when it comes to cyberattacks, however, most standard business insurance and property insurance will not cover losses affected by cybercrime, not even business interruption or loss of data. An optimal Cyber Insurance policy can cover both of these risks as well as an extensive range of cyber risks that are specific to this area of exposure, including;

Incident response
Legal abd regulatory costs
IT security and forensic costs
Crisis communication and media relation costs
Breach management
Network security liability and media liability
Third party privacy breach management costs
Funds transfer fraud
Theft of personal funds
Extortion
Corporate identity theft
Telephone hacking
Push payment fraud

The average cost per attack to small businesses is $46,000AUD and $97,000AUD for medium businesses⁴. Could your business withstand the surprise cost of a cyberattack?

3. Cyber Insurance provides an added layer of protection in more ways than one

Just as you would install security cameras and sprinkler systems and still obtain property insurance, cyber insurance provides another layer of protection in case the worst happens. Yet, its value extends beyond simply financial protection.

An essential aspect of quality cyber insurance is its access to comprehensive incident response services, particularly beneficial for smaller businesses lacking in-house expertise. These services guide organisations through the complexities of a cyberattack if one were to occur, facilitating a swift return to normal operations and minimising expenses. Additionally, certain policies offer 'Active Insurance', employing advanced security tools and round-the-clock experts to proactively monitor, detect, and neutralise cyber threats.

It is a common misconception that outsourcing your IT will stop hackers from gaining access to your networks and technology systems. Many cyberattacks begin with a human error, such as losing a phone or laptop, or clicking on a harmful link. Another point to consider is that most technology service providers enforce standard terms of service that restrict their liability. Often in cases where a third-party breach or system outage leads to business interruption and financial losses for their clients, it will be the responsibility of the client to cover these expenses.

4. Data breaches are just one type of cyber risk

Contrary to popular belief, cyber risk extends far beyond the realm of data breaches. Cyber threats range from electronic funds transfer fraud and social engineering scams to denial-of-service attacks (Read more on the range of data breach causes here).

Unfortunately, banks typically do not reimburse such losses, and standard business insurance fails to cover interruptions stemming from cyber events. The repercussions of a cyberattack can be catastrophic, particularly for small businesses, often necessitating an average of 69 days to resolve and incurring tens of thousands of dollars in expenses, if not more³.

5. Your data is your most important asset

In the digital age, businesses regard their data as one of their most valuable assets, often surpassing the worth of the physical equipment it's stored on. However, many business owners overlook a crucial fact: standard property insurance falls short when it comes to protecting this invaluable asset. That's where a cyber insurance policy steps in, offering comprehensive coverage for data restoration and even re-creation in the event of loss or damage. It's a vital safeguard for preserving the lifeblood of your business in an increasingly digital world.

Does my business need Cyber Insurance?

Given that technology underpins everything from transactions to customer interactions, businesses of all shapes and sizes, of any industry, benefit from having Cyber insurance as a key part of their comprehensive risk management strategy. Cyber threats continue to get more sophisticated, with many successfully penetrating the latest security measures. This is why large corporations spend a lot of money on security and will still experience attacks. While it is true that the cost of Cyber Insurance has risen in recent years, this is a direct response to the escalating size of cyber claims. This demonstrates the substantial financial risks businesses face from cyberattacks and underscores the level of protection Cyber Insurance can offer. Safeguarding your business against cybercriminals has never been more important.

Key Cybercrime Statistics Every Business Should Know

The average time to resolve a cyberattack: 69 days³
Small businesses report a cybercrime every 10 minutes in Australia⁴
Medium-sized businesses face an average cost of $97,000 per cyberattack, while small businesses incur $46,000 on average⁴
Small businesses are targeted in 43% of cyberattacks²
Cybercrime costs the Australian economy an estimated $42 billion annually¹

Top 5 Reasons Businesses Need Cyber Insurance