What are Cyber Liability risks?

by James on 08/10/2010 in Cyber Liability Insurance, Insurance Industry News

Cyber risks are losses and liabilities that a company faces as a result of using the internet, computer systems and email

The last 5 years have seen colossal changes in the way that information technology affects our lives. Faster and cheaper computers have resulted in millions of new users every year with access to the internet now common place at home and at work.

It has never been easier to trade online and as consumer confidence in e-trade grows, online trading is only likely to increase. Email and electronic newsletter are now used in abundance as a means of communication with customer’s suppliers and employees.

These advances in technology bring a whole new set of risks to be managed, risks which traditional insurers generally exclude from their policies. Examples include:-

Liability to a third party due to libel contained in an e-mail
Liability to a third party due to a virus transmitted by you
Liability to members of your staff due to them being exposed to sexual harassment via electronic systems i.e. pornographic images unintentionally viewed on a colleague’s PC
Damage to your computer network due to harmful virus or hacker
Loss of revenue due to downtime of a computer system caused by a virus or hacker
Theft of your money (or your clients) due to hacking or employee electronic theft
Threat or extortion relating to your computer system

Some examples of claims are:-

Norwich Union paid Western Provident £450,000 in order to settle an action that an email at Norwich Union incorrectly alleged that Western Provident was about to be investigated by the Department of Trade and Industry.

British Gas were forced to pay over £200,000 to an ex-employee arising from comments circulated via the internet that breached his privacy.
Citibank lost £6.25m to a hacker using an old computer in an accountancy office in St Petersburg. He was arrested in the UK and extradited to the US where he is now serving a prison sentence. The FBI has still not recovered £250,000 of the funds.

A computer engineer who had been employed to update the computer system of a sheet metal company was fired due to incompetence. When the company refused to pay him, he hacked into its computer system and deleted their files. It cost the company over £70,000 to rectify the damage.

In order to help assess whether your business could benefit from cyber liability insurance, ask yourself the following questions:

Macbeth Insurance Brokers have specialised in cyber liability insurance for several years and have access to a number of specialist underwriters.

If you would like a quotation for your cyber liability insurance please click here to download a proposal form. If you would like a rough premium indication prior to completing the proposal please telephone Tony Gibbs, Sales Director at Macbeth Insurance Brokers on 0118 9452 944 or email tony.gibbs@macbeths.co.uk

Cyber Liability Insurance, news