Martes, 06 Septiembre 2022

Cyber Risk Insurance in Portugal

VolverCyber-attacks do not only happen to large companies. In fact, this is an issue that cuts across all sectors and should concern all entities, regardless of their size or structure.

As it is easily understood, the trend for cyber-attacks is increasing, if we consider that the pandemic caused by COVID-19 forced many companies, to maintain their activity, to promote the digitalization of their procedures, namely using remote work, which led several domestic networks to be connected to the corporate network.

Cyber-security experts say that attacks on companies have been getting worse since September 2021, with the multiplication of successful cyber-attacks, namely on large national companies. For this reason, it is increasingly important that companies protect themselves and one of the measures that can help this protection is to take out insurance that covers cyber risks.

There are many reasons that may justify taking out this kind of insurance. We can first think of the economic losses that the company may suffer when its activity is interrupted, as well as those resulting from attempted fraud or extortion, or damages that may be caused to third parties and that the company will later have to compensate.

On the other hand, and maybe even more important than the above mentioned, we have the reputational damages that a situation of this kind may imply, which may be difficult to calculate. A company's reputation is often its greatest asset, so its compromise, for instance through the theft of its clients' or suppliers' data, may leave the company in a very fragile situation.

It was with this new and increasingly frequent reality in mind that insurance companies understood that it made sense to create products that would help protect companies in cases of cyber-attacks, so that they would not be in such a vulnerable situation.

Thus, insurance companies understood that they should combine in a single product coverage for direct damages of the policyholder, which presupposes the occurrence of a physical and material loss or destruction of tangible assets, and coverage for damages caused to third parties, also called indirect damages. In the latter case, this would involve, for example, damages related to violation of privacy, misuse of information, or violation of intellectual property rights.

Several products have thus emerged on the insurance market with guarantees ranging from loss of profits (in the event of business interruption due to an attack), data recovery and extortion (assists the company to restore and recover its systems, as well as providing the necessary support to unlock and manage an extortion threat), third-party claims (whether for a breach of its data, security breaches or a claim related to the company's liability), coverage of penalties or fines or coverage of reputational restitution expenses.

Once the claim has been reported and the responsibility transferred to it by the policyholder has been assumed, the insurance company will intervene as quickly as possible, providing the policyholder with a multidisciplinary team of specialists (which may include IT engineers, legal advisors, crisis managers or others) to manage and settle the claim in the best possible way.

We understand, therefore, that each entity should be aware of this new reality, protecting itself as best as possible, given that cyber-attacks are expected to continue, with ever greater refinement and sophistication.

It is important, however, to make a careful analysis of the general conditions of each insurance product, since some of these policies may have exclusions, for example, related to loss of profits that do not result from physical or material damage or others whose coverage may be essential for companies.

The team of lawyers in the Insurance Law Department of Belzuz Abogados S.L.P. has extensive experience in providing legal advice to national and international companies, as well as to individuals, and may be an important help in clarifying all types of questions that may arise in insurance matters.

 Luis Filipe Faria Luis Filipe Faria

Departamento de Derecho del Seguro | Portugal

 

Belzuz Abogados SLP

La presente publicación contiene información de carácter general sin que constituya opinión profesional ni asesoría jurídica. © Belzuz Abogados, S.L.P., quedan reservados todos los derechos. Se prohíbe la explotación, reproducción, distribución, comunicación pública y transformación total o parcial, de esta obra, sin autorización escrita de Belzuz Abogados, S.L.P.

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