Modern Risk: What You Should Plan for Now
Consider cyber liability and climate change when you evaluate your insurance needs.
As the world of business changes so does the insurance required to protect your business. Generally, a renewal meeting with your broker will cover time-honoured topics such as property values and business interruption coverage. However, the conversation with your broker should now include discussion on increasingly hot issues such as cyber-attacks and climate change.
Alberta is presently the only province that requires mandatory breach notification for private sector companies (federal legislation and provincial regulations require public sector organizations and health care institutions to automatically report loss of confidential data). Cyber liability policies are gaining more attention and importance as prominent corporations and even government agencies have faced newsworthy data breaches. Local businesses are starting to realize their exposure after seeing public breaches at banks, tech titans, government departments and other major organizations.
No matter how good your IT department is your business is susceptible to a breach if you electronically store any customer data. In the event of a “cyber-attack”, businesses need to de4termine whether personally identifiable information was actually lost or compromised, ensure that you adhere to all laws and regulations governing the handling of the breach, notify affected customers and protect them against fraud or other misuse of their personal data. Privacy aside, cyber insurance also may impact your intellectual property, social media liability and business interruption.
Typically the coverage protects against:
- Civil liability resulting from data breaches and misuse of social media.
- System repair and restoration
- Contractual fines, including credit card company fines, arising from privacy breaches.
- The cost to notify individuals and the cost of steps taken to mitigate larger liability claims.
- Lost revenue arising from system downtime after a computer virus or cyber-attack.
In Edmonton we have all experienced first-hand the vast increases in water, hail and wind damage claims across the province. But extreme weather incidents such as flooding, droughts, hurricanes and typhoons in the far reaches of the globe can have a direct impact on the insurance needs of your business here in Edmonton.
For business interruption insurance, your current limits and periods of indemnity may not take into account supply chain interruptions that may trigger a business interruption claim. The interruptions could take the form of raw materials shortages or prolonged delays int eh manufacturing of products and equipment. Overnight, a four-month turnaround could be closer to 12 months. the same is true for production equipment. If your local business has a breakdown of production equipment, it is important to understand how long it would take to reorder the equipment and have your production line back up and running. Your standard policy limits are likely too low and may not accurately reflect the true period of time.
It is evident that , in the next few years, extreme weather will cause property rates to rise and in some situations it will be harder to find willing insurers. The re-insurance market will become more expensive and many insurers will look to “subscription policies” to share the risk with other insurers. It will be necessary to have a strong relationship with an independent broker who has access to multiple markets and options tailored to your business.
By Daniel Robinson. From Commerce News: The Voice of Business in Edmonton, Tuesday April 2, 2013, vol. 35 no 4