South Africa has quickly migrated to remote working and digital business on account of Covid-19 and consequently instances of cybercrime are exploding.
Data leaks, demanding money from hacked businesses, identity theft and fraudulent financial losses are becoming so common that a South African startup, Surestart has developed a cyber insurance offering for digital businesses and their customers in collaboration with ITOO, a special risks insurance provider.
“When cybercriminals successfully strike an organisation, the results can be disastrous. If you’re an ethical and concerned business operating online, cyber insurance is crucial to protect your business and reassure customers that you’re protecting them,” says Travys Wilkins, executive director of Surestart, an insurtech that enables the creation and distribution of insurance products.
Cyber insurance makes business sense. There are high costs and potential damage when informing your customers of the cybercrime issue and it needs to be resolved as quickly as possible after an incident. Cyber insurance covers these costs.
Data leaks, ransomware and identity theft are rife
Ransomware is the tool of choice for modern day-pirates, who hack organisations and block access to your computer systems until an exorbitant sum of money is paid. This is one of the most pressing issues for cyber insurers globally. In the past five years, the average ransom demand has shot up from $15,000 (over R210 000) to $175,000 (almost R2.5 million) – an almost twelve-fold increase – according to the NetDiligence 2021 Ransomware Spotlight Report.
Data breaches are another serious issue in cyber insurance. Says Wilkins, “Even top tech businesses globally have not been able to avoid these. So far in 2021, high profile data breaches include 500 million LinkedIn accounts leaked on 12 April, Facebook is under investigation for its leak of 550 million people’s data and a Microsoft data breach in January affected at least 30,000 businesses and government agencies across the US.”
Consumers are also at risk
Cyber risk is not only of concern to businesses, consumers are also at risk. The two biggest individual cyber risks for consumers are identity theft and theft of funds when there are breaches in online banking financial services.
According to the South African Fraud Prevention Service, identity theft in South Africa is up by a staggering 337% in 2021. In addition, South African consumers are reportedly painfully complacent when it comes to guarding themselves against the ills of the online world.
Says Wilkins, “If your data is compromised and your identity is stolen, you will likely have several out-of-pocket costs like lost income, costs to reapply for loans, grants or other lines of credit, getting affidavits, having your ID document reissued and even possible legal costs.”
Consumer use of online banking is increasing, but this comes with financial losses should your bank account, payment card or mobile wallet be hacked. Customers who use banking apps lost 88% more last year than in 2019 and online banking losses shot up to an average loss of R32 298 per transaction.
A cyber policy would cover the investigation costs, the lost funds and legal fees. If you lost R32 298 for instance, a cyber policy would pay out the full amount or a portion depending on the cover you chose. And consumers aren’t always in control – businesses that handle customer data or payment information could be putting your information at risk by not having adequate security measures.
Wilkins explains, “Cyber insurance covers costs and damages as a result of a privacy breach or a network security breach, items which were previously uninsurable. It usually includes the costs to hire an expensive expert to deal with the problem.”
Surestart is able to provide cyber insurance products to businesses to cover themselves against ransomware, security breaches and financial losses, but it also allows for online businesses to create an additional revenue stream and to on-sell cyber insurance to their customers from R15 per month.