Tips for Insuring Against Cyber Crime

Posted August 17, 2023 at 4:14 pm

September’s Textile Services magazine will feature critical insights from a leading insurer of commercial laundries on the ins and outs of protecting your business against cyber attacks.

Anto Almasian, a risk-management consultant with TRSA affinity partner Haylor, Freyer & Coon, an Alera Group company, will outline the challenges that companies face in reviewing insurance policies in the fast-evolving area of computer hacking. Should a cyber attack occur, he lays out how your insurance partner can help you put things right for you, your staff and your customers. This is not a risk any laundry operator should take lightly. Picture yourself arriving at your office or logging into a computer off-site or on the plant floor. A message comes up in large red type that says the system is locked and you must pay X amount to regain access to your information. Route-accounting data, financial and personnel records and other key materials are at risk from cyber criminals, writes Almasian. And the problem is getting worse, he says, citing statistics showing that 2023 has seen a jump in ransomware activity. It now accounts for 28% of all cyber crime incidents – with an average payout of $600,000.

Fortunately, business owners can fight back with a quality insurance plan. But what plan will work best for you? Almasian notes that each carrier custom tailors their insurance coverage for cyber risks, “Technically, this is referred to as a ‘Named Perils’ policy,” he writes in September’s article titled “Insurance Buyers Beware … Protect Yourself Against Faulty Cyber Crime Policies.” But aren’t all cyber crime policies roughly the same? No, he says, cautioning laundry operators that, “The coverage only applies to what’s explicitly stated in the policy.”

Determining precisely what level of protection your policy offers is essential because, “Many policyholders believe that when shopping for cyber insurance, the process is apples to apples,” Almasian writes. “Unfortunately, that’s not the case. Policyholders (aka ‘insureds’) need to be hyper-aware that depending on the policy, coverage can change.”

Specifically, operators need to make sure that they have coverage against wire-transfer fraud and ransomware, as these are among the fastest-growing and most potentially damaging cyber crimes. Almasian notes that coverage levels for these types of protection vary greatly. For example, with ransomware, some policies are covered under the Extortion Insuring agreement with language that’s easy to follow and includes clear explanations of what circumstances will trigger coverage. Other policies may appear to offer similar protection against ransomware attacks, but in fact impose severe limits on cash payouts.

Policy holders, aka “insureds,” may find it difficult to navigate insurance documents to determine whether the scope of coverage they describe is sufficient to protect the company from a cyber assault. “The lack of consistency in the cyber insurance industry can confuse insureds and make it challenging to compare policies and quotes,” Almasian writes. He cites a real-life example of a well-known hotel in New Orleans that was hacked. The hotel’s managers believed that the hotel was insured for up to $2 million. However, the policy’s fine print affirmed that the coverage was “sublimited” to $200,000. The hotel sued, but to no avail because the insurer had indeed set the policy’s coverage limit at the lower amount.

To learn more, click here for a “sneak preview” of the full article in PDF format from September’s Textile Services.