Rising cybercrime puts mortgage brokers at risk, but cyber insurance offers vital protection against attacks
This article was produced in partnership with BizCover
Brad Miller is co-founder and General Manager at BizCover, Australia’s number one online business insurance service. His 20 plus years of IT expertise furthers BizCover’s mission of revolutionising the insurance industry
Cybercrime is on the rise, and the financial sector is a prime target for cybercriminals.
According to the latest Annual Cyber Threat Report released by the Australian Signals Directorate, financial and insurance services are one of the top 10 most targeted sectors for cybercrime. And while the average cost per cyber incident was down for both large- and medium-sized businesses, the cost per incident increased to $49,600 for small businesses. This is a warning bell for small mortgage firms and self-employed brokers.
“Small- and medium-sized businesses are typically easier targets for cybercriminals because they are generally less protected against attacks,” said Brad Miller, co-founder and general manager at BizCover, Australia's number one online business insurance service.
This puts mortgage brokers in the hot seat. “Mortgage brokers work in a highly targeted industry, have access to valuable financial and personal information, and are often small business owners. It’s a perfect storm of cyber risk,” said Miller.
“Cyber Liability insurance could prove invaluable to mortgage brokers, creating a critical safety net for their businesses.”
The cost-benefit of Cyber Liability insurance
Many mortgage brokers are aware of the potential dangers of cyberattacks – both financial and reputational. Still, some are hesitant to purchase additional insurance due to financial constraints.
However, with the cost per cyber incident increasing by 8% on the previous year, more SMEs are re-evaluating their cost-benefit analysis.
Business leaders, too, are beginning to look at cybersecurity as a critical part of doing business. As part of the World Economic Forum Global Security Outlook Report, 37% of business leaders agreed that cyber security was a necessary part of doing business. 51% of business leaders said that cybersecurity was a key business enabler.
“Cyber Liability insurance is quickly becoming a ‘must-have’ policy in many industries, rather than a ‘nice-to-have’,” said Miller.
Cyber threats facing mortgage brokers
The ASD cites the top three most common self-reported cybercrimes are email compromise, business email compromise fraud, and online banking fraud. 11% of all incidents responded to by the ASD involved ransomware, which was a slight increase on the previous year.
Some of the common cyberthreats mortgage brokers could face include:
- Phishing scams: Cybercriminals send fraudulent emails or messages that appear to be from legitimate financial institutions, duping brokers or their employees into revealing login credentials or client information.
- Business email compromise (BEC) fraud: Attackers impersonate a broker, lender, or client to manipulate transactions. The results are often unauthorised fund transfers or data theft.
- Ransomware attacks: Malicious software encrypts critical business files, holding them hostage until a ransom is paid. A successful ransomware attack can cause significant business disruptions and financial losses. According to the AIC, small and medium businesses are high-risk targets for ransomware attacks.
- Employee negligence: Your employees are your first line of defence. Staff that don’t have the right cybersecurity training or awareness could easily (if accidentally) allow a data breach to occur through a lack of education.
The benefits of Cyber Liability insurance
Implementing comprehensive and up-to-date security measures remains the most effective way to protect against cyber threats, but staying ahead of criminals is a challenge for operations of all sizes.
“Large corporations potentially spend millions per year on cyber security, yet many still fall victim to an attack,” said Miller. “Small businesses simply don’t have the same resources. Cyber Insurance can create an effective safety net for them should their best efforts fail.”
BizCover’s Cyber Liability offering helps small businesses minimise legal costs and expenses related to cyber incidents.
While it varies between each policy on the platform, Cyber Liability insurance generally includes cover for expenses related to data breaches, theft or loss of client information, business interruption costs, forensic investigation, data recovery, and extortion (such as ransomware payments).
Insurers also offer optional extension covers such as Social Engineering, Contingent Business Interruption, and Cyber Fraud policies.
However, the impact of a cyberattack can extend beyond the costs listed above, and most policies are designed to help the insured respond to these further challenges.
In the immediate aftermath of a cyber incident, many small business owners are unsure who to turn to for help. Many insurers offer 24/7 incident response services to their policyholders, providing critical assistance in containing attacks and minimising their impact on the business.
Policies may also cover fines and penalties imposed for breaching Australian privacy regulations, crisis management costs to help you restore your professional reputation following an attack, and legal costs should a client take civil action against your business.
“Like many industries, financial services are becoming more dependent on technology every day,” said Miller. “Cyber Insurance can provide mortgage brokers with valuable peace of mind, knowing their businesses are protected.”
This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording.
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BizCover, Australia's number one online business insurance service, was established in 2008. It now services more than 250,000 small business owners. The BizCover platform provides easy access to competitive insurance quotes and the ability to compare, manage and buy insurance online in minutes from selected leading Australian insurer partners.
