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Cyber insurance finding a market among non-profits

Source:  IBA Magazine

Do non-profits need cyber insurance? Of course they do. If anything, they may need coverage even more than businesses do.

What kinds of information do non-profits keep on their networks or—increasingly—in the cloud?  Virtually all non-profits maintain a database of donors, often spelling out the size and frequency of contributions along with contact information. What could someone do with such information? Well, for starters, they could contact donors, claiming to be representing the non-profit, or perhaps even worse pretending to represent a group with a similar name.

Many non-profits also keep lists of members or constituents that are served by the non-profit; often these people are vulnerable for one reason or another. Many non-profits work in the healthcare arena, maintaining health records and even social security numbers.

Depending on who gets this information and what they intend to do with it, the risk can reach catastrophic levels quickly.

“More and more non-profits are coming around to the fact that they have exposure to cyber risks and need cyber coverage,” said Craig Sutherland, chief operating officer at retail agency Meeker Sharkey & Hurley. He said the agency works with about 50 non-profits and that non-profit clients make up about 10% of the company’s premium base.

He said that just like businesses, non-profits can have their networks damaged by hacks and viruses. On top of that, some non-profits have substantial risk of third-party data being compromised.

“In my opinion, the largest expense most non-profits face in the event of a breach is the notification requirement. It costs an average of $200 for each person that needs to be notified, so it doesn’t take a lot of compromised records to rack up large expenses.”

Sutherland said there can also be a lot of liability if a non-profit is sued for not taking appropriate steps to protect data before an incident occurs.

Coverage for reputation and crisis management can also be very important for non-profits, he said, as in many cases a non-profit’s reputation is among its most important assets.

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