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Cyberattacks are an increasing menace to companies of all sizes in today’s digital environment. The effects of these attacks, which range from ransomware to data breaches, can be disastrous.
Cyber insurance has developed into a vital safety net that aids companies in recovering from monetary losses and harm to their reputation. But not every company is aware of all the threats they are exposed to. Here are five actual cases that illustrate the dangers and lessons that every company should be aware of in order to highlight the need of obtaining cyber insurance.
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These incidents show why, in the linked world of today, purchasing cyber insurance is not just a safety measure but also essential.
Read also: 6 Key Gaps and Exclusions Cyber Insurance Do Not Cover
5 Cyber Insurance Claims Every Business Should Know
Cyber mishaps are an unavoidable reality for businesses in today’s connected environment. The question of “when” rather than “if” now determines the risk. Businesses can improve their readiness for possible threats by learning from the effects of actual cyber insurance claims. Here, we look at five typical cyber incidents that resulted in sizable insurance claims and the key takeaways from each.
A Manufacturing Company Was Attacked by Ransomware
Overview of the Incident: A sophisticated ransomware attack encrypted the production systems and critical business data of a mid-sized manufacturing company with 200 employees. An unpatched remote desktop protocol (RDP) port was the source of the breach. Get more on “5 Cyber Insurance Claims Every Business Should Know.”
Effects and Expenses
- Demand for ransom: $500,000.
- Production was stopped for five days, resulting in a $750,000 business interruption.
- The cost of system recovery is $200,000.
- $100,000 for a forensics investigation
- Claim total: $1.55 million
Insurance Reaction
The following were covered by the cyber insurance policy:
- Payment of the ransom (after consulting with law enforcement)
- Losses from business interruption
- The cost of restoring the system
- An incident response team’s deployment
Lessons Learned
Apply fixes to systems on a regular basis – Turn off unused RDP access – Set up multi-factor authentication (MFA) – Keep safe offline backups
Create and practice an incident response strategy.
Healthcare Data Breach
Overview of the Incident: A data breach at a local healthcare provider exposed 50,000 patients’ personal and health information. Sensitive protected health information (PHI) was made public due to a compromised employee email account.
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Effects and Expenses:
- The expense of notifying patients: $200,000.
- $300,000 for credit monitoring services
- Attorney fees: $400,000.
- $250,000 in regulatory fines
- $150,000 for crisis management
- Claim total: $1.3 million
Insurance Reaction:
The following was covered by the claim:
- Affected patients’ notification expenses; impacted people’ credit monitoring; legal defense and privacy breach defense
- Assistance with public relations
Knowledge Acquired:
Establish email security processes; provide frequent training on privacy and HIPAA compliance; encrypt sensitive data; keep an eye on third-party access; and create and record security policies.
Financial Loss-Inducing Business Email Compromise (BEC) Scams
Overview of the Incident: A BEC scam targeted a real estate company, where cybercriminals posed as a senior executive and gave the finance team instructions to transfer $175,000 to a fictitious account. Get more on “5 Cyber Insurance Claims Every Business Should Know.”
Effects and Expenses:
- $175,000 in direct financial loss
- $50,000 for a forensic inquiry
- $75,000 for security upgrades
- Legal advice: $25,000.
- The entire claim is $325,000.
Reaction of Insurance
The insurance provided coverage for:
- Loss of social engineering (BEC)
- Costs of forensics and investigations
- Enhancements to security
- Fees for legal consultation
The following are the lessons learned:
- Use dual authorization for wire transfers
- Call to confirm any modifications to payment instructions
- Provide frequent security awareness training; implement DMARC email authentication;
- and instruct staff on BEC strategies.
Data Exposure by Cloud Service Providers
Overview of the event: A software company experienced a data exposure event as a result of a cloud storage configuration issue. During the 72-hour exposure, 100,000 customer records from different clients were impacted.
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Effects and Expenses:
- Notification to the client: $300,000.
- The cost of legal fees: $400,000.
- $500,000 in third-party claims
- $100,000 for crisis management
- Claim total: $1.3 million
Reaction of Insurance
The following was covered by the claim:
- Claims for third-party liability
- Costs associated with communicating with and notifying clients
- The cost of a legal defense
- Public relations initiatives
- Errors and omissions in technology
Lessons Learned:
- Perform routine audits of cloud security
- Employ encryption and cloud security techniques.
- Conduct evaluations of third-party security
- Automate configuration verifications
- Make a thorough incident response strategy.
Breach of Employee Data Privacy
Overview of the Incident:
Sensitive employee data, including Social Security numbers and salary information, was exported by an irate human resources staffer at a major retail chain, impacting 1,000 workers.
Effects and Expenses:
- Notification to employees: $50,000
- Employee credit monitoring: $75,000.
- Cost of legal fees: $150,000
- Improvements to security: $100,000
- Cost of settlement: $200,000.
- Total amount claimed: $575,000.
Reaction of Insurance
Internal breach response, employee support and notification, legal defense costs, and settlement payments were all covered by the cyber insurance coverage.
Enhancements to security. Get more on “5 Cyber Insurance Claims Every Business Should Know.”
Takeaways: Establish stringent access controls
Monitor data exfiltration activities on a regular basis. Perform audits and privilege assessments.
Create explicit exit protocols for staff members and make use of data loss prevention (DLP) technologies.
Important Lessons Regarding Cyber Insurance Claims
- Prevention is Key: Putting money into strong security systems lowers the possibility of events that result in expensive insurance claims.
- Employee Education: To prevent situations like phishing and BEC schemes, regular employee training on cyber hazards is essential.
- Incident Response Planning: To minimize harm, every company should have a well-documented incident response strategy that guarantees a prompt and well-coordinated response.
- Third-Party Risk Management: To reduce risks that could have an impact on your company, evaluate third-party providers’ security on a regular basis.
- Examine Insurance Coverage: Verify that your cyber insurance policy provides sufficient coverage for both new and developing dangers as well as possible claims.
Businesses can better plan for and respond to cyber threats by comprehending these real-world examples and lessons gained, while also making sure that their insurance policies include the coverage required to recover from incidents.
When paired with a proactive approach to risk management, cyber insurance can be a crucial instrument for protecting your company from the always changing cyberthreat scenario.
Get more on “5 Cyber Insurance Claims Every Business Should Know.”
