Insurance agents and providers are obligated to provide clients with the most current information about the exposures their business could face, and the Covid-19 pandemic is creating a host of new cybersecurity threats for thousands of restaurant owner/operators who are pivoting to delivery- and pickup-only service that relies entirely on online ordering and digital payments.
According to Restaurant Guard Insurance Vice President and Program Director Crystal Jacobs, many restaurants lack comprehensive cyber insurance coverage at a time when they need it most.
“Insurance agents must ensure their clients’ new business models are protected, and in many cases may have to educate clients on the new exposures and dangers they could face when collecting sensitive customer data such as physical addresses, phone numbers, financial information, and email addresses,” Jacobs said today.
March alone saw a 600 percent increase in email phishing scams, whereby criminals send employees official-looking emails in an attempt to obtain account passwords, sensitive data, or access to internal systems. “This pandemic is making it even more clear that every restaurant accepting online orders must protect its customers with a robust cybersecurity program and protect its own financial and legal interests with a cyber insurance policy,” she stressed.
For most restaurants, a minimum premium for a cyber insurance policy may be as little as $800 per year, providing major protections and digital expert assistance for about $67 per month. That is cheaper than most restaurants’ weekly cost for food waste. Policy costs may reflect the level of cybersecurity already in place, so establishments with strong firewalls and two-factor authentication logins may receive lower premiums than a less-prepared restaurant.
“What makes a good cyber insurance policy truly worth the investment is the response team that’s provided after a claim is filed,” she emphasized. “It’s not simply an insurance agent going through the motions, but a full team of dedicated professionals from both the insurance provider and a digital security firm who root out hackers and breaches and help develop more secure internal processes to protect against future attacks.”
Digital breaches can have severe effects on a business, ranging from loss of customer trust to prolonged law enforcement investigations to customer lawsuits. In an already challenging business environment, owners don’t have room for secondary interruptions that could further hamper sales or reputation. Ransomware is another top concern, which occurs when a criminal gains access to a business’ computer network, then locks the owners out of their own systems and demands a ransom payment to give back access.
Both ransomware and phishing attacks rely on human error and weaknesses in cybersecurity protocols to gain system access. As more sales are being transacted online, consolidating more data and requiring more employees to have access, the opportunities for digital breaches grow.
Most major insurers offer policies that provide financial and legal protection from cyber threats such as data theft or ransomware. If a cyberattack occurs, properly insured companies may receive financial compensation, but even more importantly, can be given access to a professional digital security firm that provides services such as a comprehensive risk assessment, security awareness training, and assistance in dealing with law enforcement. Specifics will, of course, depend on the distinct policy and insurer. Many policies also include provisions to handle potential customer lawsuits over privacy violations.
As the use of digital payments and data collection continues to accelerate, cybersecurity and cyber insurance are quickly becoming some of the most important factors in a restaurant’s long-term operational success.
“Therefore, agents must be proactive and inform their restaurant clients of any new exposures or challenges that could result from changes in their business operations. Whether it’s a local pizza shop or a celebrity chef steak house, every restaurant is vulnerable to digital intrusions and deserves proper information and protection from their trusted insurance agents and providers,” Jacobs asserted.