Accountancy Firms - Why Do You Need Cyber Insurance?

Accountants handle sensitive financial data for individuals and businesses, making them prime targets for cyber threats. With cyber attacks becoming more frequent and sophisticated, strong protection is crucial. Cyber insurance serves as an essential safeguard for accountants, defending against the wide range of risks from data breaches, ransomware, and other cyber incidents. This coverage not only reduces financial losses but also ensures regulatory compliance, protects reputations, and offers peace of mind in an increasingly unstable cyber world.

Below is a list of reasons why Accountancy Firms should look to add Cyber Insurance to their portfolios along with some claims examples to illustrate the how a Cyber Insurance policy can respond in the event of a Cyber attack.

• Ransomware and Extortion: Cybercriminals often use ransomware to encrypt data and demand payment for its release. Cyber insurance can cover the costs associated with responding to ransomware attacks, including ransom payments, if deemed necessary, and the expenses related to restoring data and systems.
• Regulatory Compliance: Accountants must comply with various data protection regulations (such as GDPR, CCPA) that mandate strict security measures and timely breach notifications. Cyber insurance can assist with compliance by covering fines and penalties that may arise from regulatory investigations
• Cyber Liability Coverage: Cyber insurance provides coverage for legal fees, settlements, and judgments arising from lawsuits due to data breaches or cyber incidents. This is crucial as clients or third parties may sue for damages if their information is compromised.
• Business Interruption: A cyber attack can disrupt business operations, leading to significant financial losses. Cyber insurance can cover lost income and additional expenses incurred during the downtime, helping to stabilize the business during recovery.
• Data Breach Protection: Accountants manage a wealth of sensitive information, including personal and financial data of individuals and businesses. In the event of a data breach, cyber insurance can cover the costs associated with notifying affected parties, providing credit monitoring services, and managing public relations efforts.
• Forensic Investigation: After a cyber incident, understanding how the breach occurred is essential for preventing future attacks. Cyber insurance often covers the costs of forensic investigations to determine the cause and extent of the breach.
• Reputation Management: A cyber incident can severely damage an accountant's reputation. Cyber insurance can provide support for public relations efforts to mitigate reputational damage and restore client trust
• Third-Party Coverage: Accountants often work with third-party vendors who may have access to their data. Cyber insurance can provide coverage for breaches that occur through these third-party relationships, ensuring comprehensive protection.
• Cyber Crime: Coverage for losses due to cybercrime activities such as phishing, social engineering, and fraudulent fund transfers can be included in cyber insurance policies, protecting accountants from these increasingly common threats.
• Client Requirements: Some clients may require accountants to have cyber insurance as a condition of doing business, ensuring that their own sensitive information is adequately protected.

Claims Examples

Data Breach Notification and Response Costs:

• Scenario: An accounting firm experiences a data breach, exposing client personal and financial information
• Claim: The firm files a claim to cover the costs of notifying affected clients, providing credit monitoring services, and managing public relations to mitigate reputational damage.

Business Interruption:

• Scenario: A ransomware attack encrypts the firm’s data, forcing the business to halt operations for several days.
• Claim: The firm files a claim to cover lost income and additional expenses incurred during the downtime, such as hiring IT specialists to restore systems.

Regulatory Fines and Penalties:

• Scenario: Following a data breach, the firm is investigated by regulatory authorities and fined for non-compliance with data protection regulations.
• Claim: The firm files a claim to cover the fines and any legal costs associated with the regulatory investigation.

Forensic Investigation Costs:

• Scenario: After detecting unusual network activity, the firm needs a forensic investigation to determine the extent and cause of the breach.
• Claim: The firm files a claim to cover the costs of hiring cybersecurity experts to conduct the investigation and implement stronger security measures.

Overall, cyber insurance is an essential safeguard for accountants, providing financial protection and support in managing the complex and evolving landscape of cyber risks.

The Technology, Media & Cyber team here at Jensten are ready to provide you with specialist knowledge and advice around the covers that will truly help protect your business and provide expert placement with global insurers to ensure you have the best cover for your organisation.

If you require a quotation for Technology Professional Indemnity and provide the ultimate protection for your business, get in touch today.

George Grimshaw

Account Executive - Cyber & Technology

Jensten Group