risk

Cyber Liability: Retailers aren’t only ones at risk

  There was a time when the term “cyberattack” was a cute little buzzword; now, the prospect of a cyberattack is a reality for all.  Any company with any computer equipment must be prepared.  And as the awareness of cyber crime grows, so grows the market for cyber liability insurance, which is becoming more and more essential for some firms.

Make no mistake: cyber liability insurance is growing in prevalence. Last year, Wells Fargo Insurance surveyed 100 companies from the middle-market on up; 44 percent had filed an insurance claim related to a cyberattack, and all but 15 percent of the companies surveyed had cyber liability coverage, according to Business Insurance magazine, which summarized the survey.

And with this information comes a warning: cyber liability isn’t just a threat to retailers, who have reams and reams of personal data. Any firms with any customer or personal data could be attractive to hackers, who know low-hanging fruit when they see it. A batch of Social Security numbers, addresses and any other key personal data is valuable for identity theft. And attacks can come at a big price; per the Ponemon Institute (via Reuters), a cyber breach costs $3.8 million from which to recover.

In the end, the damage to a company’s credibility can be great. Customers who have lost data lose peace of mind, in addition to resources. Trust is shaken at best and broken at worst. Companies will be expected to make it up to those afflicted, as well as employ damage control to ensure the afflicted customers don’t leave their product for another. That’s why cyber insurance is necessary, and it’s why the market for cyber is so strong.

If you would like to find out more about cyber liability coverage or other strategic insurance solutions, contact The Plexus Groupe today by calling 847.307.6100, or by visiting us at plexusgroupe.com.

References “5 Recent Reports on Business and Cyber Security, Liability and Insurance. Insurance Journal, November 6, 2015.

Cost of data breaches increasing to average of $3.8 million, study says.” Reuters, May 27, 2015.

plexus

Forming captives to minimize risk: captivating idea or costly mistake?

Captives are reinsurance mechanisms companies use to exercise greater management of risk. A captive is an insurance vehicle owned by the company’s policyholders. Companies interested in forming a captive must understand they are getting into the insurance business, and that entails using their own money to settle claims. For smart companies, however, captives offer a chance to manage risk effectively, make an underwriting profit and use the captive as an investment vehicle.

While deep-pocketed companies may have the resources to go it alone as a captive, it is a time-, capital- and resource-heavy undertaking. A group captive, where a company is invited to join a group of like-minded companies that adhere to risk management best practices, is another way to get into the captive field.

From a macro perspective, companies seeking to form captives are entering a business where the long view is the right view for success. Captives are not for companies looking to make a quick buck over a short period of time. Captives are designed for the long-term strategy of risk management. They are most effective for companies who want more control over their risk and understand their alternative risk management needs.

Forming a captive may not be for everyone, and consulting an insurance professional is a sound decision before proceeding. A good broker can help lay out the risks and rewards of a captive, including a rundown of the potential capital reserve requirements, which can vary and are in something of a state of flux at the moment. And should a company form a captive, a broker can be an invaluable resource to ensure the business is running smoothly.

Want to learn more about captives? Talk to a Plexus Groupe professional by calling us at 847.307.6100 (Chicago) or 972-770-5010 (Dallas / Oklahoma City), or contact us via the Web at plexusgroupe.com.

plexus

References

Adoor, Craig.Using captive insurance to create value for your company.” Lexology.com (Husch Blackwell LLP), November 20, 2015. Hsieh, Lawrence. Picture set to clarify for captive reinsurance regulatory muddle.” Reuters, November 24, 2015.