Cyber Insurance – Debunking the Myth of Similarity: Part II

At the end of June, we started talking about stand-alone Cyber vs Cyber that is packaged/endorsed onto another policy and how some important coverages are not equal. Limits alone in the packaged/endorsed Cyber are not enough to cover the severity of today’s Cyber-attacks. Many Insureds don’t understand the need for cyber insurance, so some tend to be more concerned about price, than what they are losing in coverage. This is why 60% of businesses close their doors within six months of experiencing a breach!

54% of all cyber claims are either Funds Transfer Fraud (FTF) or another version of Business Email Compromise (BEC). Funds Transfer Fraud is when a cybercriminal dupes the insured’s bank into transferring money, thinking they had the Insured’s approval to do so. Instead, it was an outsider pretending to be the insured. The cybercriminal could also redirect or change payment information to steal money from the insured. Social Engineering Fraud is another way to dupe the Insured into transferring money thinking the instruction was from a trusted client, vendor, etc. These are some of the easiest ways (if not the top) to the insured’s money through cybercrime.

With cybercrime, these same criminals don’t care who the victims are, if there is money to be made. They just need to gain access to the business email system and wait for a large transaction to pop up to divert, get an employee to transfer money to them, or get their bank to transfer funds to them. No negotiations or back and forth communications……just get the money and it’s done!

Small business owners have seen a 55% increase in these types of incidents over the past year. The amount of time the criminals spent watching email correspondence has increased by 75% over the past year. That went from 24 days in 2021 to 42 days in 2022. The longer they dwell in the system, the larger the payout.   2022 claim reports show that the average initial amount of Funds Transfer loss (before recoveries) was $309,000. This is why it is important to know where to look for this coverage in the endorsed/packaged policies. Most of these policies have a $10-$25k sublimit or no coverage at all.

The good news is that a Stand-Alone Cyber policy, is generally going to provide coverage at $250K limit, which will cover much more than what you see in the packaged or endorsed coverage options. Helping the Insured understand these important differences will help them overcome buying Cyber coverage on pricing alone.  Pricing shouldn’t outweigh the financial consequences your insured could experience from an FTF or Ecrime incident. This could help you not only retain the account, but also help prevent an uncovered or inadequately covered loss that could potentially force your insured to have to close their business.

If you have additional questions or concerns about your E&O Coverage, contact our OIA E&O Director of Risk Management, Ashley Riley at 614-552-3052 or email OIA Cyber Liability Account Executive Stacy Rosenthal at 614-552-3058 or email

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