ABI: Cyber insurance expected to become essential

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Increasing online dangers mean firms could be more likely to invest in new forms of cover

The Association of British Insurers (ABI) has argued businesses of all sizes are likely to require new products centred around negating the financial impact of the risks associated with cyber crime and online threats in the coming years.

Huw Evans, director general at the ABI, told attendees of this year's ABI conference on cyber insurance - held earlier this week (May 5th) - that more than four-fifths of large businesses are likely to suffer some form of cyber security breach in the next 12 months. Despite this, only ten per cent have comprehensive cyber insurance in place to mitigate their potential losses.

"Online breaches can cost millions, and would threaten the viability of many businesses, so the stakes are high. Cyber insurance is an increasingly important way for businesses of all sizes to manage this threat," he argued.

"The UK insurance industry is already providing cover for cyber risk to customers around the world. More British firms are now taking advantage of this expertise and by 2025 this type of cover will be seen as an essential business purchase."

Indeed, the ABI has published a breakdown of the five key reasons that businesses will need to invest in this form of cover in the years ahead, with the first being that cyber crime is now one of the fastest growing forms of crime in the world.

Able to easily cross borders and attract well-funded criminal organisations, this is a threat that companies across the globe now need to take seriously.

Meanwhile, the ABI warns the impact of cyber attacks can be devastating for firms that are ill-prepared, as companies can be affected by considerable downtime, loss of reputation and sensitive information, as well as being open to possible sanctions from the ICO if their safeguards were found to be insufficient.

In many cases, firms that do not take the necessary precautions to safeguard against such risks may even be forced to close as the result of the damage they sustain.

Cyber risks are evolving rapidly all the time, with criminals using the latest technologies to bypass firewalls, infiltrate systems and access areas they shouldn't. This means businesses need to be equally proactive to mitigate these risks, but there is no guarantee that even the most sophisticated systems will not contain vulnerabilities.

The ABI is therefore a firm believer that companies of all sizes will now increasingly turn to the insurance sector to offset their financial susceptibility from online dangers, and this is expected to be a major growth area in the years ahead.

Business leaders need to be aware of the online threats their companies face on a daily basis. Taking steps to manage these risks should therefore be a no-brainer.