Insurance Business Magazine - 2017 Hot List

  • By the source below
  • 06 Apr, 2017

It was Gold Coast-based brokerage Austbrokers Coast to Coast that took out Small Brokerage of the Year at the 2016 Australian Insurance Industry Awards. Less than a month later, Dale Hansen was named NIBA's Broker of the Year. There's no doubt 2016 was a year of success for Hansen and the brokerage, and he's extremely excited about times ahead.

An industry veteran with over two decades' experience and passionate about the role of the broker, Hansen is determined to play an active role in promoting awareness in the wider community of the important role of brokers, and precisely what they can achieve. Last year, Hansen told  Insurance Business  he's not buying into the "doom and gloom" regarding disruptors, and sees those businesses as providing an opportunity for brokers to reinforce their value proposition. Talking about current time, he said he's "never been prouder and more excited and enthusiastic to be an insurance broker".

We look forward to following Hansen, particularly the work he undertakes to bring home to the community outside the insurance space the real value that brokers can offer.
By the source below 05 Oct, 2017

This is a common type of insurance, involving a person or an organisation taking out insurance to protect against a liability they might face from a third party in connection with a business-related activity. The third party typically has suffered some kind of loss, such as physical and/or property damage, and, as a result of this, might try to argue that someone else should compensate them.

This claim would usually be a negligence claim brought against the other party. (Some claims are also covered by contract law or the federal Trade Practices Act 1974.)

To make a public liability claim, the person suing generally has to show that their injury or loss is the fault of the other person or organisation they are suing.

Example 1

Darren suffers food poisoning after eating a pie at the football. If he wants compensation from the person who sold him the pie, he will have to argue that his injury was their fault. In other words, that he got the food poisoning from eating the pie, and not from any other source.

Example 2

If the pie seller above is found by the court to have been negligent in serving a dangerous pie, they might order the seller to pay the injured football fan compensation. This could be a large amount. However, if the seller has public liability insurance, they won’t have to pay the amount themselves; their insurance company will pay. This could save the seller thousands or hundreds of thousands of dollars.

Claim statistics

Recently, community concern about rising public liability costs has been raised, with many organisations and individuals complaining about increased costs. This has resulted in the cancellation of some community events because the organisers could not find appropriate public liability insurance at a reasonable price.

As a result, State and Territory governments around Australia have changed the rules relating to claims for negligence. These changes have made it tougher for a person to sue for negligence by:

  • changing how compensation is calculated—compensation payments are likely be reduced making it more difficult to bring a claim, especially if the person suing was doing a risky activity
  • in some instances, not allowing the person suing to claim their court costs in their compensation claim, with compensation to be paid in stages instead of as a one-off payment.

With public liability insurance there must be a proper balance between compensation for those who have been injured through the negligence of others and the costs to society of asking insurance companies to pay this compensation. Everyone contributes to the costs of insurance. If too many claims for public liability are allowed to succeed, there is a negative effect on society as everyone has to pay more for insurance.

In recent years, there has been a steady increase in the number of public liability claims made on defendants with payouts rising.  

For example:

From 1997 to 2003 the average size of a settled public liability claim (‘settled’ means paid out by an insurance company before the matter went to court) increased from $11,000 to almost $17, 000.

From 1997 to 2003 the average cost for a public liability insurance policy increased from about $600 to $1,400.

(Source: Australian Competition and Consumer Commission Public Liability and Professional Indemnity Insurance, 5th Monitoring Report, July 2005,

By the source below 05 Oct, 2017

As the panic over dangerous inflammable cladding spreads like a bushfire, one of the country’s top strata insurance companies has come up with a course of action for worried owners.

Check your documents, then put safety measures in place if you have flammable cladding, is the message from one of Australia’s top strata insurers.

Strata Community Insurance says if a review of the original building documents show suspect cladding was installed, owners corporations should get a fire safety professional to inspect and recommend steps to improve safety.

This need not be the horrendously expensive remove and replace programme and could be a simple as a drenching sprinkler system which would at least slow the spread of fire.

In addition, says SCI, committees and strata managers should put a plan in place to recover cost and rectify non-conforming cladding immediately. They should also seek legal advice to recover costs.

Strata Community Insurance says that from early in the 1990’s, aluminium composite panel (ACP) has become a standard material for medium and high-rise buildings across Australia. It revolutionised the building sector by providing a low-cost, aesthetically pleasing skin or layer that was easy to attach to a building’s framework.

Benefits of this cladding included its ability to stop wind and rain entering a building, sound and thermal insulation as well as fire resistance. In addition, it was required to meet minimum standards under the Building Code of Australia.

In the aftermath of the disastrous Grenfell Tower fire in London on 14 June 2017 and the Lacrosse building fire on 25 November 2014 in Melbourne, questions are now being asked regarding the viability of cladding, and potential impact across Australia given the significant growth of multi-dwelling developments.

On 6 September 2017, the Australian Senate Economics References Committee recommended that the Federal Government implement a number of measures, which include:

  1. A total ban (importation, sale and use) of ACP’s with Polyethylene core.
  2. A national licencing scheme for all building professionals.
  3. A national approach to increase accountability across the supply chain.
  4. Introduction of a penalties regime for non-compliant work.

Types of Cladding

There are several types of cladding that have good fire resistance including brick, planks or weatherboards made from fibre cement, steel, aluminium and reconstituted timber products.

However, the contentious ACP cladding on Grenfell Toweri and the Lacrosse apartment building was ACP cladded with a highly flammable polyethylene (PE) core which allowed the fire to spread quickly and disastrously.

During the panel discussion at the recent Strata Fire Safety Forum in Sydney, it was suggested that for every 10 apartment blocks in Australia with cladding, approximately eight face the risk that they are covered in the highly combustible ACP cladding that caused the Grenfell Tower fire in London. This potential disaster is being compared to the asbestos crisis from the 1980s.

The panel noted that there was a higher propensity for larger buildings (from 20 to 200 apartments) being impacted, which they suggested equated to a significant portion of the housing stock. However; Paul Keating, Managing Director, Strata Community Insurance notes, “while we view the larger buildings as at greater risk because of size and height, we cannot dismiss the impact on lower level strata buildings who also need to take urgent action”.

  Who is responsible?

An investigation by the ABC’s Four Corners program, which aired on 4 September 2017, revealed that some international manufacturers and their Australian suppliers were aware of the risks associated with using ACP cladding with a PE core on high-rise buildings. However, they continued to import it because Australia’s lax and ambiguous building standards allowed it.

The situation is made more complex as it is difficult to identify where the responsibility lies for installing the non-compliant material. It could lie with developers, builders, sub-contractors or suppliers. This ambiguity may mean that apartment owners will need to cover the potentially crippling bills for the ACP cladding’s removal and replacement.

Implications for insurance

Where cladding products have passed AS1530.1-1994; the Australian Standard for flammability of external building product, it is reasonable to assume that there should not be an impact on insurance cover.

However, says the insurer, where this standard has not been met, given the nature of highly flammable cladding it may be difficult to access full insurance cover without a remediation plan in place to remove or replace existing ACP cladding.

As with asbestos from the 1980s, insurers will look to limit this additional risk. Today, it is almost impossible to obtain insurance for asbestos-related products and Strata Community Insurance fears that ACP may follow the same path.

Taking action

Owners of properties contain cladding should contact their executive committees and/or their strata managers to investigate whether there is a copy of the original architectural plans on file showing the composite of material used and whether it passed AS1530.1-1994.

In addition, they should also locate the Certificate of Conformity that was issued at the time of construction and ensure that their insurer is aware of both the existence of the cladding and its conforming (or non-conforming) status. A failure to disclose such information to their insurer may result in there being no cover under their insurance policy.

“As evidenced with the recent Grenfell fire, some ACP (including the PE core version) is highly combustible and needs immediate remediation and/or replacement and, with the recent publicity, the onus is now on lot owners to demand action given the potential for disaster,” notes Mr Keating.

By the source below 05 Oct, 2017

Miles Stratford has a stark warning for insurers, landlords and property managers – get ready, because a methamphetamine-fuelled storm of litigation is heading your way.

It is advice worth heeding. For the past five years the Auckland-based risk manager has been at the forefront of efforts to come to grips with New Zealand’s unfolding crisis with methamphetamine, or ‘ice’ as it is colloquially known. He fears the insurance and property management industries in Australia and internationally are in for a rude and costly awakening.

At the moment, no-one is really worried about it because they don't see it as a problem – it is a hidden issue,” Miles says. “But wind forward 12 months and if real estate agents, property managers, conveyancing solicitors and other intermediaries haven't changed their habits and behaviours, you are most likely going to have a whole bunch of risk and liability that sticks.”

For most landlords and property managers, the closest they have probably come to the world of illicit drug deals and organised crime until now is watching the latest cop show on television. However, a huge escalation in the supply and use of ice in recent years – including a proliferation of meth labs in rented apartments, houses, sheds and other buildings – has drawn many unsuspecting property owners into the web of criminal activity that surrounds the drug. It is becoming increasingly common for landlords to find that their rental house or unit has been turned into a veritable factory. Kilograms of dangerous synthetic drugs could be churned out, impregnating walls, floors, carpets, curtains in the procees. Even plumbing systems with highly toxic and volatile chemicals pose a severe and lingering health threat and could even trigger an explosion.

The damage caused can run into the tens of thousands of dollars. Specialist cleaners using highly specific chemicals and techniques are required, and the process can take weeks. In the American state of Virginia, for instance, Department of Health guidelines on the steps that need to be taken to clean residential properties run to 19 pages and stipulate 13 key actions1. Miles says in New Zealand the cost of such clean-ups typically comes to between NZ$15,000 and NZ$30,000.

Owners keen to offload their property are often also required to disclose if it has been used as a meth lab, potentially hurting its capital value2.

In New Zealand, homebuyers are increasingly insisting on meth tests before completing their purchase, and of almost 13,000 properties tested by Miles’s company MethSolutions since 2012, about 40 per cent have had traces of the drug.

Tip of an iceberg

The illicit nature of the ice trade means that its scale can only be estimated, but official figures on drug seizures and meth lab busts, combined with wastewater monitoring and surveys of drug use, give some clue as to its scope.

From 2009 to 2013, the amount of ice seized globally more than doubled from 32 to 88 tonnes3, while seizures at the Australian border jumped 60-fold from 2010 to 2014.

The rise of ice has been so rapid that it is now widely considered to be the second-most commonly used illicit substance in the world, after cannabis, with some estimates putting the number of users as high as 54 million worldwide5.

Australia has become an especially attractive market for criminal networks because a combination of rapidly rising demand and high relative wealth has meant users are paying high prices. It has been reported that in 2013–14, the street price of ice in Australia was AU$675 a gram, compared with AU$268 in the United States, AU$122 in the United Kingdom, AU$111 in China and just AU$14 in Mexico6.

In the US, almost a third of state and local police agencies reported last year that methamphetamine was the greatest drug threat in their area7, and surveys indicate that the number of new users jumped 71 per cent between 2010 and 2014.

Buying local

While the international trade in ice is large, the nature of the drug means that criminals are also producing it locally to meet domestic demand.

Because it is a purely synthetic drug that does not involve growing plants (unlike cannabis, cocaine and heroin), it lends itself to being made in basic labs on a small scale, making production highly mobile9. So, as quickly as authorities shut down one meth lab, others spring up.

In Australia in 2013 police detected 608 clandestine meth labs, with a notable trend towards larger operations, with an attendant increase in the contamination they produce and the risk they pose10.

The problem is being amplified by an emerging trend for drug makers to spread their operation across multiple homes, says Aon Risk Solutions Sales Manager – Real Estate, Joanna Boyd.

“Different phases of the production process are occurring in different homes,” she says. “Therefore, more homes are being impacted.”

Claims on the rise

The incidence of chemical contamination caused by meth labs is causing concern for insurers, as well as landlords and property managers.

In New Zealand, insurers are clarifying their liability. IAG, the nation’s largest insurer, says it is receiving up to 80 claims a month, and pays out NZ$14 million a year to cover meth-related damage.

Faced with mounting claims, the insurer (which covers about half of the country’s 450,000 rental properties)11 has sought to ‘manage’ its costs. In March, it announced a NZ$30,000 cap on claims, an increase in standard excess from NZ$400 to NZ$2,500, a lift in landlord insurance premiums of up to NZ$130 a year and clarification that cover does not extend to damage caused to house contents12.

“Insurers have a role in signalling risk and trying to prompt better behaviours through how we construct our policies,” the insurer states. “We need to be very clear about levels of cover, and that includes establishing a higher excess so that landlords are encouraged to vet prospective tenants and monitor their homes rigorously, and that homeowners themselves remain vigilant.”

By the source below 05 Sep, 2017

As a tenant we don’t often think it is necessary to have contents cover but this can be costly assumption to make.
A good contents policy not only covers your contents but also your Australia Wide Liability for property damage or personal injury you may cause including damage you may cause to the property you lease. We have outlined a few scenarios in which you could become legally responsible for damages to help explain this cover further.

▪ A pan catches fire causing smoke damage to the house and fire damage to the kitchen .
This claim will range from $50,000 for clean up to the value to replace the entire building.

▪ Your pet damages the carpet and a scratches walls.
This could result in replacement of carpets and repairs to the walls costing $10,000. A Plaster and Paint of one wall is normally approximately $2,500.

▪ You throw a small party which gets out of control.
Uninvited or invited guests cause damage to the property inside and out resulting in repairs of $30,000.

▪ A friend visits and consumes alcohol, as they are leaving they trip and fall down a small flight of stairs.
We all have a duty of care for all persons on our property and this is legally seen as a breach of that
duty. Your friend could pursue you for medical costs and trauma. This type of claim would normally result in a minimum of $80,000 just to determine if you are liable or not. Should the claimant be successful this could increase to over $200,000.

▪ You have hired a scooter in Bali and you have your friend on the back, you have an accident and they injure themselves.
The cost of medical care and fights home will cost a minimum of $30,000. Once back in
Australia your friend may also pursue you for ongoing costs and compensation. This could result in legal costs and payments in excess of $200,000.

People without insurance who are confronted with the above circumstances are often faced with bankruptcy if they are not properly insured.

Contents insurance can be tailored to your requirements and doesn't need to be expensive. We will help you find a product that fits your requirements.


By the source below 05 Sep, 2017

    Thunderbolts and lightning are very, very frightening on their own, but add heavy rains tumbling down and golf-ball sized hail stones smashing into things, and there are many ways a storm can wreak havoc to both our property and us. Each year across Australia and New Zealand, storms and hail cause hundreds of millions of dollars’ worth of property damage and injuries to people. Here you will find some information on what to do before a thunderstorm or hailstorm.

    Here are some things you can do to protect yourself, your family and your property if you live in a storm prone area.

    • Ensure your property is clear of any dead trees or bushes, keep trees and shrubs away from the house and power lines.
    • Perform regular maintenance on your home and property as materials deteriorate over time, especially in sub-tropical and tropical climates.
    • Be aware of changes to building standards, these standards are in place to reduce the risk of damage to your home, so have a builder check the structural soundness of your home as well as the condition of the roof.
    • Keep gutters and downpipes clear.
    • Prepare a household emergency kit with essential items such as a portable radio, spare batteries, torch and a first aid kit, and make sure everyone in your family knows what the risks are and formulate a plan for contacting one another if separated.
    • Review your home and contents insurance policy and update a list of your home's contents. You can use Insurance Tracker to help with this.
    By the source below 05 Sep, 2017
    A grieving mother who lost her son to diabetes faced further heartache when she was not only burglarised but was also treated callously by her insurance company’s fraud investigator, it has been alleged.

    Violet, not the claimant’s real name, lodged a home contents claim after a thief broke into a back shed containing her deceased son’s belongings and got away with $20,000 worth of items.

    The third-party investigator allegedly accused Violet of being a liar and of stealing the items herself, pelted her with irrelevant questions including about her plans for the weekend and the death of her son; and even told her: “No wonder you don’t have a husband,” The Sydney Morning Herald reported.

    Violet’s story is one of many cases that have prompted the general insurance industry’s monitor, the Code of Governance Committee, to look into how external investigators are being used by the industry to detect and avoid paying out fraudulent claims.

    While there is a need to crack down on fraud, which costs insurers $2 billion a year and subjects honest policyholders to higher premiums, consumer advocates said the lack of rules for investigators has seen them bully, threaten, and intimidate claimants, SMH said.

    A new committee report has revealed that when insurers outsource claims-related functions to “service suppliers,” including investigators, compliance with the Code of Practice was “unpredictable” and the degree of oversight in some cases was “inadequate.”

    “As well, there is not enough guidance provided to external investigators when interviewing consumers,” committee chair Lynelle Briggs told the publication.

    “We also found that some respondents have authorised [investigators] to handle complaints when [insurance companies] are required to perform this function [and] some respondents’ contracts with [investigators] do not align with the code’s requirements.”

    The committee urged the industry to develop a set of best practice standards, and made 30 recommendations, including that interviews do not exceed two hours; that questions be “relevant, fair, and transparent”; that investigators assess whether claimants have special needs and provide them with additional support; and that guidelines be set up for interviewing minors.

    Drew MacRae from consumer advocacy group Financial Right Legal Centre (FRLC), said there was indeed a systemic problem with insurance investigations and that this problem should be quickly addressed.

    “We believe the recommendations should be implemented straight away because we think the industry has been on notice for enough time,” he said.

    “One of the key recommendations is communication, because we found that most people had no clue that they were being investigated, and if they did, they had very little information about what the process involved and their rights.”

    By the source below 07 Aug, 2017
    General insurer Virginia Surety will refund more than 500 customers over $330,000 in premiums, ASIC has said.

    The insurer will offer refunds and will have a condition placed on its Australian financial services licence, for improperly selling consumer credit insurance policies.

    From June 18, 2013 to December 31, 2015, Virginia Surety sold consumer credit cover, a bundled add-on which includes both life and general insurance, to customers taking out loans at car yards in Queensland and New South Wales.

    Search and compare insurance product listings for Financial Institutions from specialty market providers here

    ASIC found that the insurer had stated that the life cover in the add-on policy was underwritten by TAL Life, without TAL’s permission, leaving customers at risk that claims could be rejected even for paid policies.

    ASIC placed a condition on Virginia Surety’s AFSL so the firm has to refund the life premium paid by affected customers and engage an independent external compliance expert approved by ASIC to review compliance practices and report to the regulator.

    Peter Kell , ASIC deputy chair, said that consumers should have confidence when purchasing insurance cover that claims will be recognised.

    “The fact that Virginia Surety was selling this insurance without the life insurer’s approval indicates serious deficiencies with its compliance,” Kell said. “We have put all insurers in this market on notice that they need to change their practices and ensure they are properly considering the interests of consumers.”

    TAL has agreed to honour the life cover for those consumers with impacted policies and pay claims even though consumers will receive a refund from Virginia Surety.

    By the source below 07 Aug, 2017

    On one of the television channels special report shows they had an session last week (May 2017) criticizing the insurance industry including a broker over damage to a vehicle that had been insured for only third party property damage.

    This form of cover is risky in itself as there is no cover for damage to the vehicle when the driver themselves is at fault and or if it is damaged whilst parked and the person that hit the vehicle does not leave an honest note. Further there is no damage for weather perils or if the car catches fire or is stolen.

    Having said this there are fire, theft and third party property damage covers available, but they are still not as good as comprehensive.

    I do not know the circumstances of the matter and cannot comment as to why the other vehicles insurer is not coming to the party. There may be an exclusion such as  drink driving, unregistered vehicle, or the vehicle may have been un-roadworthy. it is possible that the insurance may have expired. These are all risks you take when you do not have full comprehensive insurance.

    In addition to remind people of this issue I also want to again warn that there are a lot of unscrupulous firms preying on unsuspecting people. They typically focus on people in the lower socioeconomic community. This group of course can least afford to be caught up in the scam financially and often do not have the training or experience to know how to fight the fraud.

    What we have seen is such a person, end up with a repair bill of say $10,000, plus a hire car bill of over $25,000, kindly provided by the scammer, when the damaged car has a net value after salvage of say $5,000.

    This is becoming a major problem in Australia, along with staged accidents, dodgy repairs. It was great to see arrests reported a little while back on fake injury claims and I know the insurance industry is throwing a lot of resources on building the case against many others as well.

    The sooner the better as it sickens that any one is caught by scammers but particularly those who are already victims and can least afford it.

    Any journalists out there please be careful of the companies you inadvertently promote in your programs and please go back after a few months and ensure that the whole thing has had a good ending for the innocent party.

    By the source below 07 Aug, 2017

    The great promiseof autonomous vehicles , aside from saving you from the tyranny of commuting, is their ability to save lives by replacing stupid humans with intelligent computers. But these cars, at least in the short-term, could make driving riskier because people don't yet understand the technology or just how it works.

    British auto insurance companies call this "autonomous ambiguity," and it is not an abstract issue. Automakers like Audi, Cadillac, Mercedes-Benz, Tesla, and Volvo already or will very soon offer vehicles that do some of the driving for you. In a new white paper, the Association of British Insurers argues that drivers don’t understand the limitations of these semi-autonomous systems, and believe their car is more capable than it really is.

    “This risk of autonomous ambiguity could result in a short term increase in crashes,” said Peter Shaw, CEO of Thatcham Research which collaborated on the report.

    As magical as it may seem to sit in a luxury sedan as it zips down the highway without any assistance from you, these semi-autonomous systems remain somewhat basic. They combine adaptive cruise control to main a safe following distance and automatic lane keeping to keep the car within its lane. Such systems typically require clearly delineated lane lines, reasonably good weather, and, most crucially, driver attention in case something goes awry.

    Dire warning aside, the British insurers “strongly support” vehicle automation, arguing that artificial intelligence will reduce accidents and save lives. Some 40,000 people died on US roads last year, and the figure is rising .

    But the technology's early days worry the researchers. Systems differ, as do their capabilities. Automakers have varying ideas on how best to implement the technology, and because there are no standards, drivers can't be sure how a particular system works. And it's not like automakers are in a rush to explain what these semi-autonomous systems can't do—their flashy adverts typically highlight how clever they are.

    With that in mind, the Association of British Insurers suggests a simple, two-stage, classification for cars—assisted or automated—and says international regulators should get on board. Under its proposal, an "automated" car is capable of driving itself in virtually all situations, come to a stop safely if it cannot drive itself, avoid every conceivable crash, and continue working even if something in the system fails.

    Few people expect the automotive industry to reach that level of autonomy at a large scale for at least another decade. And that means just about every vehicle with any kind of autonomous tech will be labeled "assisted." That may seem like a small distinction, but the idea is to remind drivers that the car is not fully in control.

    The Insurance Institute for Highway Safety in the US agrees about the looming problem, but says terminology isn’t going to fix it. The automakers must find ways of ensuring that drivers understand they must be alert and ready to take the wheel. “They need to make sure the technology keeps the drivers engaged,” says IIHS President, Adrian Lund. “Just putting it in the owner’s manual won’t work.”

    Automakers are taking heed. After Joshua Brown died when his Model S sliced under a truck that turned across his path in Florida in May 2016, Tesla modified its AutoPilot system with increased visual and auditory cues when drivers take their hands off the wheel for too long. Mercedes-Benz offers a similar trick with its Drive Pilot, although it can be confusing to use .

    Cadillac takes things a step further with its Super Cruise , which the automaker calls the first truly hands-off semi-autonomous system. It monitors drivers using a camera behind the steering wheel to ensure they're looking up at the road, not down at their phone. It also engages only on divided highways.

    The day is coming when your car is a better driver than you are. But until that day, consumers must remember that semi-autonomous vehicles are not infallible. Anything that automakers–and regulators—can do to remind them of that will only make everyone safer.

    By the source below 07 Aug, 2017

    Cyber breach could kill your business, Lloyd's warns

    As sophisticated cyberattacks increasingly target businesses, the world's specialist insurance market is warning them to be properly prepared or face significant financial losses that could kill their business.

    According to Lloyd's report, titled “Closing the gap – insuring your business against evolving cyber threats,” businesses face the rising threat of ransomware, such as last month's Wannacry and the recent Petya attack, distributed denial-of-service attacks, and CEO fraud.

    The study, which was made in partnership with KPMG and DAC Beachcroft, cited Lloyd's underwriter Beazley , for instance, as having seen a fourfold increase in ransomware attacks on its customers from 2014 to 2015. It also predicted that this number will double this year.

    Study findings also revealed that financial services firms are the most targeted by organised cybercrime, and named retail as another sector that's seeing increasing cyberattacks.

    Oil and gas, meanwhile, can fall victim to espionage and occasional high-end disruptive attacks as they find themselves caught in national politics, the study said.

    The study also revealed the susceptibility of the public and telecommunication sectors to espionage-focused cyberattacks.

    Commenting on the study findings, Lloyd's CEO Inga Beale stressed the need for adequate protection against looming cyber threats.

    “The reputational fallout from a cyber breach is what kills modern businesses. And in a world where the threat from cybercrime is when, not if, the idea of simply hoping it won’t happen to you, isn’t tenable,” she said.

    “To protect themselves businesses should spend time understanding what specific threats they may be exposed to and speak to experts who can help handle a breach, minimise reputational harm, and arrange cyber insurance to ensure that the risks are adequately covered.

    “By reacting swiftly to mitigate the impact of a cyber breach once it has occurred, companies will be able to minimise the immediate costs and their exposure to subsequent slow burn costs,” she said.

    Matthew Martindale, director in KPMG 's cyber security practice, also cautioned businesses to prepare against a breach's long-term damage: “Dealing with things like reputational issues and litigation in the aftermath of a breach, can add substantial costs to the overall loss. Businesses really need to start thinking about the cyber risk holistically rather than one that is currently very short sighted.”

    This sentiment was echoed by Hans Allnut, partner and head of cyber & data risk at DAC Beachcroft, who said businesses should not only focus on immediate business impact, which he said “may only be the tip of the iceberg,” but also legal consequences which could take months, even years to deal with.

    “Once notified, it is not uncommon for regulatory investigations to take more than a year before they reach a conclusion, “ he said. “Subsequent litigation can take even longer, particularly because the law surrounding data security and privacy is a relatively evolving area. In one UK data protection case, it took three years and a failed appeal before the litigation was finally settled.”

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