COVID-19: Cybersecurity Insurance is Ounce of Prevention for Small Businesses

COVID-19: Cybersecurity Insurance is Ounce of Prevention for Small Businesses

COVID-19: Cybersecurity Insurance is Ounce of Prevention for Small Businesses

Without a way to communicate with his patients, Dr. William Scalf sat in his office and waited to treat whoever showed up. A computer virus injected into the electronic medical records system at Brookside ENT & Hearing Services was holding him for ransom. Rather than meet the hackers demands for $6,500 in exchange for a code he could not guarantee him access to the lost files, Dr. Scalf and his business partner, Dr. John Bizon, chose instead to close the doors to their medical practice in Battle Creek, Mich., for good.

The early retirement was not only devastating to the doctors, but also to their patients, who no longer had access to the medical records, appointment schedules, and payment information that had been overwritten or erased. While data breaches involving sensitive patient information should have been top of mind for the ENT surgeons, an uptick in similar ransomware threats underscores the need for small business owners to focus on cyber risks.

Cyberattacks — like the one perturbated on Brookside ENT & Hearing Services — can be particularly crippling for small businesses. Many simply do not have the resources that larger companies do to help them recover from an attack. Unfortunately, many small companies are not doing enough to improve their readiness to thwart an attack, such as ransomware, malware, denial of service or credential theft. Even more are less likely to have cyber insurance.

Small business owners have become a favorite target of cyber villains. An Accenture study revealed 43 percent of all online attacks are aimed at small businesses. Yet, only 31 percent of small businesses have cybersecurity insurance policies, according to a CyberScout survey.

Cost is one reason, said Nathan Coomes, a business development executive with Orchid Insurance which provides specialty products to homeowners and commercial properties in the United States, the Caribbean, and the Bahamas. The other is that business owners do not believe their profile warrants coverage.

“At a time when COVID-19 has pushed more people to work from home, employers and their employees are at a greater risk than ever to cyberattacks, said Coomes. “Small businesses need to do a better job of protecting their at-risk assets. What many business owners don’t realize is that a failure to take some basic steps can threaten their existence.”

Lessons from Pandemic

Coomes said one ounce of protection is insurance. Orchid offers a standalone cybersecurity coverage to protect businesses against expenses that might result from data breaches including forensic investigations, customer notifications, extortion, and lawsuits.

“Many small business owners are mistaken to think that their business policy provides coverage for a cyberattack,” said Coombs. “Standalone coverage offers both value and security by ensuring the appropriate levels of coverage for all types of small businesses as opposed to adding cybersecurity coverage to a business owners policy that may have coverage limitations.”

COVID-19 has exposed the importance of cyber insurance. With more employees working from home because of the pandemic, cyber criminals have stepped up their activity to exploit the new working conditions. According to a new report from Guidewire, FBI cybercrime reports quadrupled during the first phase of the COVID-19 pandemic. Phishing attacks spiked 350 percent, and ransomware demands exploded in 2020 as hackers took advantage of the COVID virus and deployed increasingly sophisticated tactics against individuals, businesses, hospitals, and schools.

Prior to the pandemic, small businesses were generally thought to be a less attractive target to cybercriminals because there just was not as much to steal from these owners as there was from big companies. But Coomes said that does not mean small companies can ignore the potential for cyber threats any longer.

“The problem is that many small businesses don’t know they’ve been put in jeopardy,” said Coomes. “One reason is they don’t have the technology to alert them of an attack when, the truth is, they have become part of a larger threat involving more than one target.”

As small business become more and more dependent on internet services in their daily operations, the potential for a cyberattack multiplies. Coomes said it is imperative for both small businesses and agents to learn more about the potential risks and the affordable insurance options that are available.

“If a small company depends on even the simplest form of information technology to generate revenue, then cybersecurity insurance is a good idea,” said Coomes. “Given today’s environment, a good agent is in a position to explain the value of a standalone cybersecurity policy and how the various options might work to keep their clients’ businesses secure.”

Orchid Underwriters Insurance, LLC, is the First Choice for commercial property insurance. If you need flexible products, fast processes, expert underwriting and competitive pricing, superior customer service is a phone call away at 1-866-370-6505 or visit https://orchidinsurance.com/

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