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Cyber Insurance Risks and Solutions – 2017

Cyber Insurance Risks and Solutions – 2017

Cyber insurance is here to stay. For independent agencies still reluctant to embrace cyber offerings, there's not much choice left. The product reaches into nearly every sector of the economy and is fast becoming a viable commercial insurance product.

In 2015, nearly $1 billion in cyber insurance premiums was reported to regulators. On top of that, global estimates top out at nearly $3 billion in premiums per year. Most experts agree coverage will continue to grow.

Lloyd's of London found that over 92% of businesses in the European Union had experienced a data breach within the last five years. The demand for cyber coverage is here to stay.


What is Cyber Insurance?

Cyber insurance is simply a policy created to protect a business's liability if a data breach were to occur. Common forms of cyber attacks include stealing credit card or social security numbers. 

There are a number of different types of cyber insurance, which are often available separately under a single policy. These include:

  • Security Events Cost: This coverage refers to the cost of hiring a breach coach to advise on regulatory requirements when notifying people about a breach that affected them.
  • Business Interruption: This coverage protects a business from a non-physical loss due to a cyber attack. The attack can occur at an insured site or a dependent location.
  • Loss of Digital Assets: This coverage ensures recovering and recreating data that has been lost or destroyed is covered.
  • Cyber Means: If a theft was perpetrated in a cyber manner than this coverage protects your business from it. Examples could be schemes where thieves impersonate email styles to trick staff into providing data or transferring funds.
  • Liability for Losses: Coverage for individuals who suffered medical, financial and other hardships due to personal information being stolen.
  • Electronic Media Liability: This coverage ensures a company will be protected from personal injury from intellectual property rights claims by producers of content.
  • Regulatory Coverage: Helps cover the costs for fines, penalties, and investigations in the event of a cyber security event.

Understanding Limits and Sub-Limits

As cyber insurance coverage is continually changing, it can be difficult to keep up with everything. Even some great brokers struggle to keep up with all the changes in the marketplace.

Due to the various types of cyber insurance coverage, the complexities stem from the structural differences in policies. Many insured are startled to find out the relationship between sub-limits and limits within their policies.

One important focus for cyber policies is whether a policy requires insured to pay a claimant before being reimbursed or if the policy pays on the insured behalf. This can change depending on the type of coverage within the same policy.


Continual Competition

Cyber insurance is becoming increasingly competitive. Most in the industry view cyber policies as a new growth segment, especially for certain specialty markets. Due to the competitive nature of said coverage, pricing tends to be sticking points for decision makers.

Brokers and agents must focus on the quality of cyber coverage and service – over price. Cyber policies are purchased for their ability to help a company respond to a cyber crisis.

As such, finding a cyber vendor who offers high quality consultants and breach vendors can be paramount. Legal staff, forensic services, network security, and more should be considered, too. 


Cyber in the Future

Cyber insurance is here to stay. The growth is there, along with the need. As such, underwriters are beginning to make moves towards standardization. With language standardized, a simplification of the complicated application process could be forthcoming.

While the need is there, many companies still do not see cyber coverage as mandatory. If more companies begin to make cyber protection a priority, then this market could explode in the coming years. 

For more information about cyber insurance contact Skyline Risk Management, Inc. at (718) 267-6600. 

The Upside of Tech-Savvy Construction

The Upside of Tech-Savvy Construction

In a world full of bad news, good news comes in the form of the rise of the construction market. While it has not quite hit pre-recession levels, numbers are expected to increase in 2017. So now that the market is recovering, the next goal to tackle is how the construction industry can be improved.  It turns out that technology might play a big part in the future of the business. New technological tools are already bringing new advantages to the worksite and opening up the doors for new and possibly better ways of doing things.


Loss Reduction

The ability to predict, detect, and counteract losses is game-changing possibility that new technology tools are turning into a reality. Damages to construction from weather and nature-related losses have always been an unfortunate side effect of the trade.  One does not have to look too far back to find a time when technology limitations made weather difficult to track and therefore more frequently devastating. With advancements in technology, weather prediction became more accurate, and contractors were able to prepare better for the coming storms. In the same manner, new technologies are making risks that were hard to predict more manageable.


Building Information Model

A Building Information Model (BMI) is a digital, 3D model of a building that contains combined resources between engineers, architects, and members of other construction trades to help more accurately and more efficiently make development and designing choices. With the shared knowledge of all parties involved, everyone becomes more informed about the other areas of construction. Increased knowledge and awareness makes for a safer and more accurate construction environment. BMIs also provide for less duplication of work, easier conflict resolution between trades, and the ability to be closer to perfection than ever before.


Detectors and Predictors

As mentioned earlier, the weather has always been a significant risk in construction. Enhanced forecasts are a plus, but the precision of weather predicting is reaching higher levels than ever before. A weather predictor or application is an invaluable tool to use on the job site. The ability to anticipate potentially devastating weather provides for the time to take the necessary precautions to lessen or eliminate damage completely.

Water leakage is another area where technology has provided a tool to assist. New water leakage detection technology can determine where there is possible water leakage on a job site. Catching water leaks fast can mitigate any further damage that may have otherwise occurred.


Other Technologies

The development of functional and sophisticated drones has also lead to a convenience in the industry regarding surveying usage. Could the forefathers in construction ever have dreamed that one day we could survey a job site without ever setting foot on it? Another piece of technology that brings a whole new wave of possibility is the 3D printer. The ability to recreate just about anything is a mostly yet untapped potential in the construction field but could provide endless benefits in the future. Mobile Apps are also an area of technology that is teeming with advantage for the tech-savvy tradesman. From calculating apps to assist with supply configuration to blueprinting gadgets, there is a whole market of construction-related apps available.

The fact of the matter is that we are living in the 21st century and as a benefit of life in our time, we are privy to technological advances that those that came before us could ever imagine. The construction industry is no exception to these advantages. The construction market is changing, and technology is beginning to play a bigger and bigger role. Now is the time to make use of the tools that are out there. 

For more information contact Skyline Risk Management, Inc. at (718) 267-6600

European Businesses Continually Under Attacks From Cyber Criminals

European Businesses Continually Under Attacks From Cyber Criminals

Companies in the United States have dealt seriously with cyber security for almost a decade now. The CEOs of most enterprises in the country understand the issues a cyber breach can bring.

Companies like Target and Sony have suffered greatly due to cyber attacks, and the boards of directors for many U. S. -based businesses have decided that cyber security is a huge issue worth investing in.

European businesses are a bit behind the times when cyber security is the topic at hand. That is all about to change. The European Union is about to introduce strict regulations.


The General Data Protection Regulation

Starting in 2018, the General Data Protection Regulation will create stringent requirements for all companies doing businesses in Europe. If a company handles European consumers' data, they will be required to comply with the regulations – no matter where the company is based.

To better understand how European companies deal with cyber security, Lloyd's commissioned a survey. The survey found that only 54% of CEOs in Europe take responsibility for cyber security. Many do not take the risk and impact of a major cyber attack seriously.


A Real Risk Right Now

While European CEOs do not take cyber security as seriously as their U.S.-based counterparts, they may need to. The Lloyd's survey found that 92% of businesses in the region had suffered a data breach within the last five years. That is a staggering number.

Despite evidence to the contrary, only 42% of European CEOs believe a future breach to be worrisome. Most companies were more focused on the threat of an external attack or a hack. The risk of internal attacks was not a concern for most firms.

When questioned about the motives of a potential hack, companies were concerned with the probability that a hacker would attack for financial gain. Political reasons and hacking by a competitor were also cited as primary concerns.

While European companies are beginning to focus on cyber security, there is a real risk right now. If the companies do not start to focus on these risks immediately, their complacency will cost them greatly in the future. The implications of a cyber attack could be vast.


Understanding Cyber Insurance

While big businesses in the United States typically have some form of cyber insurance, business leaders in Europe are generally unaware of the need. Over 73% of CEOs in Europe had a limited understanding of cyber insurance, according to the survey from Lloyd's. Another 50% did not realize that insurance for data breaches is available.

As the conversation about cyber security continues in Europe, many companies will be forced to pay attention to the new EU regulations and how to protect their consumer data properly.

Typically, this focus will result in added cyber security measures and some type of cyber insurance coverage. Cyber insurance is more than coverage for lost income. The coverage includes customer protections and a focus on preserving a company's reputation. 

9 Real Risks When Using Drones

9 Real Risks When Using Drones

Drones have quickly become a huge industry. Nowadays, you will find drones flying over your head often. These unmanned aircraft systems are piloted from the ground using a control station and offer simple solutions for many a dangerous task.

The drone industry is booming, and most predict it will be a multibillion-dollar sector within years. Industries like industrial inspection, border patrol, photography, fire fighting, and more have all adopted the technology with great success.

Drones & Insurance

Even insurance companies have gotten in on the drone craze. Using drones to survey damage after a disaster has become common practice for insurers. As such, insurance companies know exactly how much risk can be associated with using a drone.

Drones are not cheap, either. Thus, all drone owners should understand and evaluate their insurance options. So here are nine real risks every drone user faces:

1. Crash & Collision

If you are piloting a drone and you cannot see another aircraft, there could be a disaster coming. Mid-air collisions can happen when using a drone. Typically, these accidents will occur with:

1.       Other drones

2.       Helicopters

3.       Agricultural aircraft

4.       Commercial aircraft landing or departing


2. Malicious Attacks

Drones can be used for evil, too. There have been reports of drones being used to target infrastructure, and many have concerns about a drone attacking a large crowd at a stadium or concert.

3. Losing Control

No new technology is perfect. It is common to lose control of a drone. This happens if the device flies out of range, if the frequency is interrupted, or a system failure occurs. There have already been numerous reports of such incidents, including major injuries.

4. Spoof Alert

Spoofing occurs when someone attempts to take control of a drone by hacking the signal and commanding the aircraft from a different control station. This is a huge risk. Cyber attacks can result in a drone being stolen out of mid-air.

5. No Regulations

Using a drone still has a bit of the wild, wild west feel. There are very few regulations regarding drone use throughout the world. This could become a real problem, especially when sharing airspace with military operations.

6. Problems with Privacy

Many are concerned with the ability of drones to spy and invade privacy. Drones can be used to invade privacy, trespass, and more. Soon, the Federal Aviation Administration will provide drone owners with a set of guidelines dedicated to privacy.

7. Skill of Operator

Many drone owners are novice hobbyists looking to have fun and mess around with new technology. These pilots are rarely skilled and can provide a large risk to public safety when playing with their unmanned aircraft.

8. Crazy Growth

Any industry that is predicted to see such growth as drones are will have some risks. Drone use is expected to triple by 2020. This will lead to a lot more bad pilots out there and more problems.

9. Insuring Drones

Ultimately, insuring drones will be a difficult endeavor. Many hobbyists will not want to insure their drones. Many businesses will require full coverage. An underwriter will have to look at the aviation risks of an unmanned aircraft in a different manner to manned aviation.  

Insuring Against the Cyber World

Insuring Against the Cyber World

In the age of social media, live streaming, the cloud, and smart phones, the internet has become a hot spot for crime. As seen in the movie Hackers, those with a certain skill set can choose to use those skills either for good or for evil. Those using them for evil are finding new and innovative ways to hack into your business systems, your personal smart phones, and even your web-based home security systems. However, those using their skills for good are helping businesses and everyday citizens stop these hackers from the onset, keeping personal data safe and secure. As this industry need to protect your data at every turn rises, the need to have insurance in the event of a problem also rises, making cyber security insurance the newest wave of income for property and casualty insurance suppliers.


The Landscape

Liability coverage for cyber security is a growing area for many insurance providers. As of today, over fifty insurers are carrying lines that protect your cyber risk. However, there is little known, as of yet, about this field of liability and how the courts will react to lawsuits brought about as a result of a hack and loss of data or monies from the victims. Even more important, cyber issues are changing daily. Just as technology, in general, changes faster than most people can keep up with, cyber issues change just as rapidly. The hacks are becoming more and more complex and the losses are becoming steeper. New laws are enacted regularly to attempt to mitigate the issues and the losses, however, when dealing with the internet, US regulations do not necessarily have any effect on our ability to catch or prevent perpetrators from places like Russia and Hong Kong.

Currently, the insurance industry has a tough road ahead if it is to make cyber security insurance a must-have for most businesses.  A 2015 Risk and Insurance Management Society Cyber Study shows that only 51% of its respondents purchased stand-alone cyber policies. Fifty-eight percent of those policies carry less than $20 million of coverage. In addition, the premiums of 49% of those policies exceed $100,000, which is quite high for many small to mid-sized companies. The good news is 74% of those without insurance for a cyber risk plan can purchase a policy right away.


Some Solutions

Information from numerous avenues has made a clear case that cyber risk is the number one emerging and non-traditional insurance risk facing businesses today. As technologies continue to improve and expand, cyber risks will become more invasive and prevalent in business. PwC’s 2014 Global Economic Crime Survey saw 17% of businesses and 39% of the financial sector had been victims of cyber-crimes. In the past two years, these numbers have only continued to climb.

As a result, the federal government has attempted to at least track the problem to help the process of finding a solution. The Federal Cybersecurity Information Sharing Act was created to facilitate companies sharing cyber threat information and their best practice guidelines to prevent the attacks. However, many businesses fear this does not solve the problem, simply because the reports are done only if data is lost and other filings must be completed. Therefore, insurance is still at a standstill when trying to truly determine the risk of cyber security issues.


The Actual Coverage

In this unstable environment of the launching of insurance offerings, not only are businesses trying to understand their risk, but they are trying to understand the new coverage.  Many carriers will cover loss of data and notifications to third party victims, as well as associated fines and issues resulting from the end client’s loss. However, if money is transferred between the first party and the scammer, it is unlikely the insurance policy will pay back that money as it is not easily proven to the insurance company that the monies were given to the fraudster and that proper due diligence was conducted prior to parting with the monies..

 
 

Furthermore, since this is a relatively new idea for protection and the insured may have significant coverage gaps, cyber insurance may be too costly for some of the smaller, more at-risk firms to afford. Currently there is no cap on the premium and no true understanding of the risk for most business models. As a result, insurers are mitigating their potential losses by raising premiums based on access, not true risk.

There is still a lot of research and development needed to decipher and mitigate cyber risk insurance.  In the meantime, it may be best to speak with a person who deals almost exclusively in this field of insurance to understand the needs of each client in this field.