Claims demonstrate why cybersecurity insurance is a no-brainer

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The value of any insurance policy is best demonstrated at the time of claim. And the claims resolved by specialist Delta Insurance from its cyberlines show that every New Zealand organization should seriously consider mitigating the risk of hacking or malware, as serious consequences can arise from even minor disruptions to your business. That’s not all – the company claims that the process of buying insurance will in itself improve your safety.

Released in late 2021, the National Cyber ​​Security Center’s Threat Report detailed 404 incidents affecting organizations of national importance in fiscal year 2020/21, a 15% increase from to the previous year. As these high-profile cyberattacks affecting organizations such as NZX, banks and Waikato Hospital make headlines, Adrian Sweeney, head of underwriting at Delta Insurance, says there are hundreds, if not thousands , other violations affecting everyday Kiwi businesses. “The primary motivation for most attacks is financial – they want money, usually in the form of Bitcoin or other cryptocurrencies.”

Examples of organizations for which Delta has recently handled claims include an automobile dealership, a food manufacturer, and an environmental consultant. “New Zealand is a nation of small and medium enterprises. But being small and medium doesn’t stop you from being a target. Every organization is in the crosshairs and the methods used by hackers are increasingly sophisticated, including automated systems and an often very professional approach. It’s a business for hackers.

It is therefore not surprising that the most common attacks include ransomware that blocks or threatens to steal and distribute sensitive data or applications, with an exorbitant demand for cryptocurrency – because these currencies are nominally anonymous. “That’s when the people targeted realize the importance of their data. They also realize they have no choice but to pay the ransom,” says Sweeney.

Even that has its complications. Converting dollars into cryptocurrency can be tricky, as can the process of transferring it to the hacker’s online crypto wallet. Then there is the open question whether the hacker will actually provide a working decryption tool unlocking your data.

“The bottom line here, and always, is ‘prevention is better than cure’,” Sweeney points out. “But if prevention isn’t possible, cybersecurity insurance certainly is.”

He adds that for policyholders, paying the ransom is the absolute last option and is always discouraged. “We provide technical support to recover or restore the data to avoid having to pay the ransom. This often costs more than the ransom, but is worth it because paying a criminal is likely to violate international sanctions. And that encourages the next heist,”

Let’s go to the claims

Delta offers comprehensive cybersecurity insurance offering business interruption assistance (covering loss of profits in the event of an attack on computer systems), liability, hacker theft coverage in the event of theft of funds, network extortion, triage and breach consultation by appointing IT specialist or law firms as appropriate. , Restoration costs, Data Forensic

Services analyzing root causes and even public relations expenses to help manage your reputation following a breach. It also offers credit reporting and monitoring services, preventing damage from identity theft, and provides guidance on mandatory reporting of breaches under the Privacy Act 2020.

Three claims recently handled by Delta show how cybersecurity insurance saved the day.

1. Industry Body – Data Breach

An industry trade body suffered a data breach compromising members’ credit card information. After the complaint was filed, a Delta-appointed forensic team sprang into action, investigating and resolving the breach, while attorneys assisted in notifying the Privacy Commissioner and contacting affected members. Delta contributed to the insured’s system improvement costs, helping to prevent future attacks. The total cost of the remediation was over $100,000.

2. Cosmetics company – DDoS attack

A cosmetics company suffered a Distributed Denial of Service (DDoS) attack, shutting down its website and preventing the company from doing business. The attack is believed to have come from an animal welfare group hitting back at allegations of animal testing. The insurer has appointed an incident manager and appointed an IT specialist for problem solving. The insurance policy covered:

  • Business interruption losses
  • Installation of shield stopping the attack
  • Improved network preventing future incidents.

3. Food manufacturer – malicious employee

A senior executive fired from a food manufacturer maliciously deleted a significant amount of sensitive data from his company’s laptop. The cybersecurity insurance policy provided for the appointment of a forensic investigator who examined the hard drive, with experts subsequently carrying out a successful data recovery exercise.

Why Being Insured Means a Better Cybersecurity Posture

Smart managed security service providers are doing something interesting about their cybersecurity offerings: tailoring their “basic” services to the policy documents of cybersecurity insurers. “It’s telling because these MSPs recognize the approach to risk management taken by insurers,” Sweeney says. “And indeed, we will not accept customers who do not have strong cybersecurity technologies, processes, practices and measures in place. It would be too risky – and cyberattacks are a quick way to lose a lot of money, not only for those without adequate protection, but also for an insurer who takes excessive risk.

The process of acquiring cybersecurity insurance is therefore somewhat rigorous, with the insurer examining your environment and assessing your threat surface. “It will let you know where you are very quickly,” says Sweeney. “Basically, if an insurer is willing to offer cover, that means your security posture is strong. If not, well, you’ve got some work to do and probably a roadmap showing the way forward.

Delta Insurance is a specialist underwriter of niche products https://deltainsurance.co.nz/.

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