In today’s world, the absence of a comprehensive liability insurance package is fatal for any business, especially for small and medium enterprises (SMEs). Surprisingly, a study from Austria says that many SMEs in Australia are actually underestimating the value of such protection, believing that threats like cyber-crime are irrelevant to them. The Broker Buzz newsletter from Insurance & Risk Professional provided specific details:
“The Zurich-Advisen report found only 14% of small- and medium-sized business thought cyber crime (sic) posed a serious risk to their businesses, despite the fact they are also the least likely to have sophisticated security in place.
In contrast, 86% of the largest businesses viewed it as a serious threat.”
Even if they possess a management liability insurance policy, SMEs still don’t have enough protection from losses due to data breaches, online theft, and other cyber-crimes. They would have to work closely with reliable insurance brokers, such as those from Insuring theProduct, in order to come up with the best insurance plan to protect themselves from litigation. After all, if computers are used to commit a crime, liability claims simply become more muddled.
As the name implies, management liability insurance protects a company’s executives and managers from certain forms of litigation, specifically those that pertain to insolvent trading, fraud, discrimination, employee theft, and the like. However, it also has the more important role of preventing the company from suffering excessive financial losses, especially if it is forced to pay for restitution, statutory fines, and penalties. At the very least, this insurance policy can provide indemnity for defence costs and associated costs in the claims processes.
Things can become a bit more complicated when cyber-crimes are involved, though. While scams and online theft are traditional examples of cyber-crime, the Australian Federal Police also use the term to describe any crime committed with the use of technology. This means that selling business secrets online may also be considered a cyber-crime, which is something that a management liability insurance policy can’t protect against. Again, if SMEs want to adequately respond to such circumstances, they need to work with a Buderim management liability insurance broker or a similar professional to ensure that their bases are covered.
Ultimately, a basic policy that can protect a company from management-related litigation still deserves greater concern. SMEs can’t hope to defend against hacking and data breaches if they can’t even protect themselves from paying workers’ compensation too often.
(Source: Cyber crime a double-edged sword for SMEs, Insurance & Risk Professional, July 09, 2014)