The Ultimate Guide to Cyber Insurance for Financial Companies

The financial sector faces growing cybersecurity challenges as cybercriminals target its valuable and sensitive data for profit, extortion, theft, fraud, and leverage. The sector also suffers from a shortage of qualified cybersecurity professionals and a complex regulatory environment.

According to Sophos, ransomware attacks on financial services institutions increased from 34% in 2020 to 55% in 2021. Moreover, 42% of the affected companies paid a ransom to either restore their data or avoid public exposure.

Another recent report highlights that the financial industry experienced an average data breach cost of almost six million U.S. dollars in 2022, coming in second to the healthcare sector. Data breaches in the United States usually cost around nine million U.S. dollars. The costliest cyberattacks are those that involve fraudulent emails targeting businesses (BEC) or individuals (EAC).

These alarming statistics make it clear that financial companies need to protect themselves with cyber insurance.

We Have the Best Cyber Insurance Policies for Financial Companies

Here at Brighton Financial and Insurance Services (BFIS), we understand the risks that financial institutions face and offer dedicated commercial insurance tailored to meet their needs. We specialize in providing comprehensive cyber insurance from top-rated carriers which includes data breach response services, technology and privacy liability protection, cyber extortion coverage, business interruption expenses – including those due to viruses or malware attacks, regulatory defense costs, cyber risk assessment and monitoring services, and more.

Our goal is to ensure that our clients are well protected against the ever-evolving threats in cybersecurity, so we also provide training for security awareness, best practices on how to respond to a security breach, and guidance on cyber insurance policies. We strive to make sure that our customers have the best coverage and protection they need so that their business remains secure.

If you are a financial institution looking for cyber insurance, contact us today, and let us provide you with an unbeatable policy. We look forward to protecting your business from any possible threats in the digital world.

Common Cyber Attack Threats to US Financial Service Companies

• Phishing: A phishing email is the starting point for 91% of all cyber-attacks, according to Deloitte. Phishing is the attempt to steal sensitive information such as passwords, usernames and credit card numbers through fraudulent messages or emails.
• Malware: A malicious software (malware) attack can disrupt a financial institution’s operations by stealing user data, blocking access, encrypting files, or corrupting computers.
• DDoS Attack: Distributed Denial of Service (DDoS) attacks overwhelm a network or website with requests, causing it to crash or become unavailable. DDoS attacks can be used to disrupt business operations and prevent customers from accessing services.
• SQL Injection: A structured query language (SQL) injection attack occurs when hackers insert malicious code into an application’s query. This can give hackers access to sensitive databases or allow them to forge transactions.
• Social Engineering: Social engineering attacks involve manipulating people into revealing confidential information or allowing access to a system by exploiting human weaknesses such as curiosity, trust and fear. Common social engineering methods include phishing emails and spoofed websites.
• Insider Threats: Insider threats occur when a person with access to an organization’s systems uses that access for malicious purposes. Insiders may have the ability to steal intellectual property, customer data or other confidential information.

It is important for financial services companies to have strong security protocols in place to protect against these threats. Effective measures include regular monitoring of systems, employee education on cyber security best practices and the implementation of multi-factor authentication. 

Additionally, financial organizations should remain up-to-date on the latest strategies used by hackers and should consider investing in a managed security service provider that can help them identify and address potential risks. With the right protections in place, financial services companies can protect their customers and mitigate cyber security threats.

Understanding Financial Institution Cyber Insurance/ Cyber Security Insurance

Financial institution cyber risk insurance is a policy that provides protection to financial companies against the losses caused by cyber-attacks. There are various types of cyber insurance policies available to meet the needs of each financial institution, such as:

• Data Breach Response Insurance – Helps with the costs associated with responding to and repairing losses from data breaches. It covers expenses related to notification, credit monitoring, legal assistance, crisis management services, forensic investigation costs, public relations campaigns, and more.
• Regulatory Defense Insurance – This type of coverage allows companies to pay for legal and other expenses associated with defending against regulatory actions or fines imposed by government agencies or regulators.
• Cyber Extortion Coverage – Pays out in the event that a cybercriminal threatens to shut down services, steal data, or hold it hostage, unless payment is made.
• Business Interruption Coverage – Covers expenses associated with a temporary disruption of services caused by cyberattacks, such as lost revenue, extra costs for launching new services, and more.
• Network Security Liability Insurance – Protects against financial losses due to third-party claims related to network security breaches or failure. It covers legal expenses, damages, and other costs associated with defending or settling third-party claims.

Commonly, financial service cyber insurance policies are customized to meet the needs of individual companies, taking into account factors such as industry, size, and risk profile. It is important for financial institutions to thoroughly assess their risks and consider what type of policy best suits their particular needs.

Who Needs Financial Service Cyber Insurance?

Financial services companies need cyber insurance for a variety of reasons. Financial institutions are prime targets for cybercrime due to the sensitive information they keep on customers, such as their account numbers and financial history. In addition, with the introduction of new technologies and services, these businesses must stay ahead of evolving threats in order to remain secure. Some of the groups that may need financial service cyber insurance include:

• Banks and credit unions.
• Investment companies.
• Brokerage houses.
• Insurance agencies.
• Mortgage lenders and servicers.
• Online payment processors and money transmitters.
• Payment card networks.
• Financial advisors and consultants.
• Hedge funds and private equity firms.
• Credit reporting agencies.
• Robotics process automation providers, such as artificial intelligence (AI) and machine learning (ML).
• Software or technology companies that provide financial services products/solutions.
• Fintech companies that offer financial services technology solutions or payment processing services.
• Wealth management firms and trust companies.
• Financial planning firms and consultants.

Other types of businesses may need financial service cyber insurance as well, depending on their individual needs. It is important for businesses to thoroughly assess their risks and consider what type of policy best suits their particular needs.

What is Not Covered by Financial Service Cyber Insurance?

Financial service cyber insurance does not cover all types of risks or incidents. The following are some examples of what is generally excluded from a financial service cyber insurance policy:

• Losses due to intentional acts, such as theft, fraud, and/or criminal activities.
• Patent Infringement, Copyright Infringement, or Trade Secret Misappropriation.
• Bodily injury or property damage caused by a product or service.
• Reputational harm due to libel, slander, or defamation of character.
• Claims arising out of the use of pre-existing technology or software that does not meet industry standards.
• Punitive damages and fines associated with claims made against the insured's business or services rendered by it.
• Acts of war/military operations by foreign governments that don't involve cyber terrorism
• Losses resulting from computer viruses, malware, or other malicious code not related to a cyber incident.
• Loss of data due to hardware/software malfunction or failure.
• Software license infringement claims arising out of the use of open-source software.
• Known or suspected claims prior to the policy inception date.
• Regulatory fines and penalties unrelated to a data breach.
• Claims brought by third parties against the insured for their own actions/omissions that do not involve a cyber incident.

It is important to note that not all cyber insurance policies may cover the full extent of financial damage caused by a loss of intellectual property. While some policies may provide coverage for immediate costs incurred during the aftermath of a cyberattack, they may not include long-term losses such as damage to business reputation. This can result in significant financial loss for companies in the aftermath of a cybersecurity breach. To avoid potentially devastating consequences, it is crucial for businesses to carefully review the scope of their cyber insurance policies and ensure that all areas of potential loss are adequately covered.

How Much Does Cyber Insurance for Financial Institutions Cost?

The cost of cyber insurance for financial institutions varies widely depending on the size and complexity of the institution, as well as the scope of coverage provided. Generally speaking, policies that provide wider coverage tend to come with higher premiums due to the increased level of risk assumed by the insurer. Premiums also vary based on several other factors including the company’s past cyber incident history, its current security posture, and the type of data that is being protected.

Businesses should also take into account additional costs such as policy fees, deductibles, and other administrative costs when considering a cyber insurance policy for their institution. Ultimately, the cost of a financial institution’s cyber insurance will depend on the exact coverage provided, as well as the amount of risk assumed by the insurer.

In addition to protecting against financial losses from a cyber incident, businesses should also consider investing in other security measures such as employee training, advanced technology solutions, and regular audits. These types of measures can help to reduce the impact of a cyber attack and minimize the losses associated with it.

Get a Cyber Insurance Quote for Your Financial Service Company

If you are looking for a cyber insurance policy for your financial service company, it is important to shop around to find the best coverage at the most competitive rates. At Brighton Financial and Insurance Services (BFIS), we understand the unique needs of financial, tax and accounting businesses and have developed flexible policies that can be tailored to meet their specific requirements. Our experienced team will work with you to develop a policy that is right for your institution, ensuring you have the best protection possible. Contact us today to get a free quote for cyber insurance coverage.