UPS Capital, the financial services arm of shipping and logistics giant UPS Inc., today rolled out a cyber liability insurance product designed for small and medium-sized businesses.
The policies provide what is known as "first party" coverage for security-breach response, cyber extortion, and income and digital asset restoration, according to Atlanta-based UPS Capital. The unit said it will also offer "third party" coverage for financial consequences arising from a cyberattack, such as litigation and investigative costs and related fines. Most standard business insurance policies only offer third-party protection, though most claims for cyberattacks involve broader first-party coverage, according to UPS Capital.
"Cyberattacks and the need for cyber liability insurance are a growing concern for our customers," said Mark Robinson, who last week was named president of UPS Capital. "Many small and mid-sized companies are just not prepared for the type of loss a cyber-incident can cause."
According to a report prepared earlier this year by business insurance specialist Hiscox Inc., and cited by UPS Capital, 68 percent of small businesses and 72 percent of large firms had experienced a cyberattack during the previous 12 months. Robinson said nearly two-thirds of cyberattacks are perpetrated on small and mid-sized businesses.
One cyberattack can cost a mid-sized business between $84,000 and $148,000, and the costs may escalate from there should operations be halted while the breach is identified and assessed, according to UPS Capital.
The cyber liability product can be purchased as a stand-alone product even if a customer does not use UPS' shipping or logistics services. That is a departure from the unit's long-held strategy of tying financial and insurance services into the parent's physical distribution portfolio to synchronize the flow of goods, information, and funds.