A flagship government programme that offered up to £5bn to protect suppliers from collapse of their customers has only provided just £7m of assistance to 52 companies since it launched.
The scheme which was announced in the Budget was the government’s idea to help shore up the market as nervous private sector insurers cut their exposure during the credit crisis.
A leading organisation is of insurers and underwriters are predicting that the recession and continued job losses will see an increase in white collar extortion against businesses. The organisation also found that many businesses are not insured against cyber crimes which could result in data or business loss.
“According to a DTI Information Security Breaches Survey, a third of UK businesses think general small business insurance provides full cover for damage to the business arising from data loss,” commented a spokesperon, “but the reality is quite different, with very few businesses likely to be insured against the result of cyber attacks on its most crucial management and business tool – corporate and customer information, most of which is today held on corporate IT systems.
“For public company directors, this is in fact in breach of their duties under the Turnbull Report, which requires them to identify, manage and take an informed opinion on the transfer of risks for the business.”
While installing the latest firewall and virus protection programs can help, the fact is that many cyber attacks are carried out by hackers who enjoy the challenge of breaking into systems. There are an ever increasing number of computer viruses which continue to cause damage to businesses. A spokesperson for the organisation went onto say:
“The economic downturn has resulted in people of all levels and responsibilities losing their jobs, and those with a detailed knowledge of their former employers’ IT and operating systems may well present a real potential threat, and turn to extortion as a way of taking revenge on their former employer, and of making some money at the same time.
“Malicious erasure of data from client files or tampering of individual internet websites is a real risk and will cost a business dear in both clerical and management time, as well as through lost revenue and reputation.”
As a result of the potential increase in cyber terrorism businesses are being advised to thoroughly review risk management procedures and insurance programmes to ensure they have the correct cover in place.
Small business owners could be taking huge risks with their businesses according to a new survey conducted by the British Insurance Brokers Association. Many of the SMEs questioned had failed to get proper advice about commercial insurance cover.
Commercial insurance cover is a complicated subject and many businesses fail to recognise the difference between receiving information and receiving advice.
The study found that around one-third of SME owners who didn’t use an insurance broker didn’t realise they were only receiving information on a single insurer’s products and were not being advised which policy would best suit their business.
The study found that small business owners are often too pressed for time to read and research all the conditions of a small business insurance policy.
The result is that businesses often find themselves unprotected and unprepared for the risks that face their company. Most businesses find that their insurance policy fails when they need it most – when they need to make a claim.
Eric Galbraith, BIBA’s chief executive, says: “It is clear there is confusion among commercial buyers of insurance, and we have suspected this for some time. It is worrying to think these firms could end up with inadequate or even the wrong cover because they did not receive advice or a recommendation.”
The sheer number of insurance policies available means that business owners have plenty of choice when it comes to purchasing a policy, but many businesses fail to buy the right cover the association warned. This is where the experience of an insurance broker is helpful as they can recommend policies based on businesses specific needs
Insurance brokers take the time to learn exactly what each company needs and provide assistance in the event of a claim.
The research found that the feedback from those who did use brokers was generally positive, with 95% of SMEs saying they are likely to do so again for their business insurance when their policy is due for renewal.
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