As we emerge from the COVID-19 pandemic, businesses continue to deal with supply chain constraints as well as the tribulations brought on by increasing inflation. In addition to these economic pressures, the number of cyberattacks continues to grow. When meeting with your insurance advisor, it is important to discuss how these current events affect your business and what you can do to properly mitigate risk in the changing landscape.
For example, it is estimated that over half of all businesses are underinsured when it comes to property and business income exposures. With inflation lying relatively flat over the past decade, many business owners haven’t recently reviewed the replacement costs on their properties. Furthermore, the supply chain disruption we are seeing should prompt all business owners to reevaluate the time it takes to become operational if a loss should occur. What once took a year to build is now taking 15 months or more. Suppose you haven’t taken into consideration the increased timeframe and adjusted your business income limits to best reflect these changes in exposure. In that case, you could be unintentionally self-insuring a significant amount of risk. Unfortunately, inadequate business income limits are often the number one reason why a business goes under after a large loss.
Another threat that is constantly evolving is cyber attacks. Since the onset of the COVID-19 pandemic, cyber security experts have seen a dramatic increase in cyber activity targeted at businesses of all sizes, with ransomware being the number one problem. This was further amplified as cyber attackers took advantage of the lack of security measures during the rush to implement virtual workspaces.
This increase in activity has tested businesses and the insurance marketplace at a level never before seen. This has forced cyber insurers to constantly reevaluate the coverages offered as well as the requirements the policyholder must adhere to. It is now crucial for businesses and their IT departments, whether internal or external, to work together with their insurance consultant to know what security protocols need to be put in place to protect the business and obtain the proper insurance coverage.
When obtaining cyber coverage, your insurance advisor needs to match your business with a cyber insurance carrier with both proactive and reactive resources for navigating the cyber landscape and complying with regulatory issues. Not all carriers are created equal, and what may work well for one business may be inadequate for another.
To properly mitigate risk in the current business landscape, it is crucial to identify and protect against your business’s most significant exposures because they may be drastically different from those just two short years ago.