Yutree’s whistle stop guide to cyber liability insurance for BIMA members

With high profile companies such as Royal Mail, the UK Electoral Commission and Facebook all targeted over the last 12 months, we tend to think of cyber criminals as only targeting large organisations. However, 96% of all cyber-attacks are directed at small and medium-sized businesses.

Whilst members have a clear cyber exposure to their own data and systems, digital marketing and tech companies also face some unique challenges in terms of the data they might hold for clients and how their platforms operate. This can include:

• Holding clients’ customer data such as bank accounts and contact details.
• Protecting clients’ search and social advertising channels from bots. This includes trying to cut through bot clicks to gauge true visitor numbers but also preventing malicious bots.
• Members’ clients also expect suitable protection of their own data which includes sensitive information such as login details to control panels, financial  data and the like.

So, how does a cyber insurance policy help? Essentially, it passes the risk to an insurer who will pick up the costs and more importantly, manage the incident on behalf of the member.

Here’s a brief technical overview of how the policy cover works:

First-Party Coverage

This part of the policy covers direct losses to your business, including:

• Data Breach Costs: Expenses for notifying affected individuals, credit monitoring services, and forensic investigations.
• Business Interruption: Loss of income and extra expenses incurred due to a cyber incident disrupting normal operations.
• Cyber Extortion: Costs associated with dealing with ransomware attacks, including negotiation, social engineering and payment of ransoms.
• Reputation Management: Costs for public relations efforts to restore your business’s reputation after a cyber incident.

Third-party cyber cover

This aspect covers claims made by third-parties affected by a cyber incident involving your business:

• Damages: costs and damages the insured business is legally obliged to pay to third parties.
• Costs and expenses: legal fees incurred to defend against the liability action (often extending to claimants’ costs and expenses if the insured is obliged to pay them).
• Regulatory fines and penalties: fines and penalties levied by regulators and other bodies.

Trends for the rest of 2024

The latter half of 2023 and early 2024 saw downward pressure on cyber premiums after several years of price increases caused by heightened ransomware activity. Multi-factor authentication has played a key part in reducing cyber events, helping to reduce incidents by up to 90%.

Through the rest of 2024, we expect the claims environment to be sufficiently tough to offset sustained reductions on pricing, but stable premium and excess levels should remain.

We’ll continue to see increased regulatory scrutiny on data privacy, with governments across the globe introducing new privacy laws for businesses. In the US, the landscape is even more complex, with individual states creating rigorous privacy regimes so any members with US operations need to consider this legislation.

We’re likely to see an increase in third-party privacy liability claims, many of which will arise from new areas such as the alleged misuse of biometric data and website tracking technology.

For more information or a no obligation quotation, please contact one of the Yutree BIMA team below:

Simon Miller, Commercial Director

Contact Simon on 01638 675933 or email simon.miller@yutree.com

Jo Hocking, Client Executive

Contact Jo on 01638 474012 or email jo.hocking@yutree.com

Kate Young, Senior Insurance Broker

Contact Kate on 01638 474004 or email kate.young@yutree.com