There’s no industry exempt from the increasingly volatile cybersecurity landscape — but for cannabis businesses, it’s just one more ball to juggle. Here’s what you need to know about navigating this growing insurance risk.
1. Cyber Liability and Property Damage Are Intertwined
In today’s world, cyber liability and property damage policies are connected. For example, your property is cyber if you operate your equipment digitally, store inventory online, and track profits via software. Unfortunately, downtime due to cyber security threats or equipment failure can range from annoying and expensive to business-threatening.
Pro Tip ↓
Want to know more about cannabis property insurance and Named Storm coverage? Read this: Cannabis Property Insurance: What Is Named Storm Coverage?
As a result, protecting your equipment goes beyond a typical cannabis insurance policy, such as property damage, because this policy doesn’t account for cyber downtime — which is where a cyber liability policy comes into play.
We must also consider connected networks and the ripple effect of one piece going wrong. The fact that our digital landscape is increasingly and irrevocably intertwined with the “real” world makes cannabis cybersecurity a rising concern that won’t disappear anytime soon.
2. The Risk of Damage Due to a Data Breach
Like other industries, the cannabis industry collects and stores more personal data from its consumers than ever. Ensuring this data is protected isn’t just a financial best practice; it’s also crucial for consumer trust and business longevity.
According to IBM, 83% of companies will face a data breach at some point, which is a costly problem. Data breaches in the US cost companies over twice the global average, highlighting the importance of having comprehensive insurance coverage. The longer a data breach goes on, the more expensive it becomes. It takes about nine months to identify and contain a breach — a widely expensive timeframe. Attacks are also becoming more common; in 2021, ransomware attacks were up by 41%.
Consumers feel brands are responsible for protecting the information they share, and failing to do so can have catastrophic consequences. A 2019 Consumer Survey found that 81% of people would stop engaging with a brand following a data breach. No company wants to lose a single customer due to a lack of trust, but experiencing a breach to some degree is inevitable for most in today’s business landscape.
3. Standard Cannabis Insurance Limits Are Exhausting Quicker
The cannabis industry is no stranger to fast change, but insurance policies can be slow to follow. Yet the cyber liability limits that were adequate just a few years ago may no longer cover your exposure. With cannabis cybersecurity a growing concern, we imagine insurers will be developing solutions to meet company’s new and evolving needs — but not without a price tag.
Why? The pandemic harmed cyber security. As the world moved online, hackers quickly took advantage of any opportunity, increasing the threat of a breach by 81%. As risk increases, so does the cost to cover it. This cost changes for every company that faces the exposure — not just businesses that have experienced a breach.
Pro Tip ↓
Cyber liability premiums have increased — but why must breach-free companies feel the rise?
Customer Success Manager Rachel Jenkins explains this issue by introducing hurricanes into the picture. Read it here: To Understand Cyber Liability Premiums, Let’s Talk About Hurricanes
Since 2020, cyber liability premiums have increased by 37%. This change has forced insurers to rethink their approach to cyber liability coverage across industries and often increases costs. Businesses also have to keep policies updated, which may mean expanding the insurance limit in your policy (the maximum amount your carrier pays for a specific loss.)
Protecting your cannabis company can seem confusing; however, we’re a full-service insurance brokerage working with carriers worldwide to offer you the best coverage possible. We’re here to help! Please reach out to us today by emailing [email protected] or calling 646-854-1093 for a customized letter of commitment or learning more about your cannabis insurance options.