Covering your Interruption

For Canadian businesses, institutions and government agencies, ransomware and cyberbreaches have become an epidemic.

Just five years ago, cyber risk ranked Number 15 in the annual Allianz Risk Barometer; this year, it has skyrocketed to Number 2.1

If you have been paying attention to the recent cyber hacks of massive organizations such as Equifax and Bell, then the Canadian budget released in February should come as no surprise. The federal government committed more than $271 million over the next five years to provide for cybersecurity and combat cybercrime.

Today, it is almost negligent for a company to fail to insure against the threat of a cyberattack, and insurers are developing more intricate cyber policies.

In particular, business interruption is an increasingly important facet of cyber insurance that may help an insured mitigate against certain losses.

Following a data breach, an organization may face a loss of sales, ransom demands, reputational harm, first-party expenses, third-party exposure, and overall business disruption. Cyber policies offering coverage for business interruption aim to indemnify companies for loss of profit, reputational harm, increased cost of working, and costs of mitigating losses. While these basic concepts are understood in the context of traditional property damage claims (such as a fire), there are fundamental distinctions related to cyber policies.

Read the full article in the Digital Edition of the April 2018 Canadian Underwriter.

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