Unique to Manufacturing: Contractual Damages Endorsement

by | Oct 27, 2020 | Market Trends

The rise of cyberattacks in the manufacturing industry in 2020 is astounding and deeply concerning for small and mid-size businesses in this market. According to CrowdStrike, manufacturing companies have experienced an 11% increase in cyberattacks on their networks this year compared to 2019.  

Most small and mid-size manufacturers might incorrectly think that their business is not a target for cyber attacks; nothing could not be further from the truth. Their economic activities represent a gold mine for cyber criminals. Manufacturing businesses, including small operations, are targeted for the following reasons:

  • Business interruptions are costly: any incident that stops a chain of production or any system that supports the chain of production can lead to significant losses and legal pursuits because of the inability to fulfill contractual requirements. This is why ransomware attacks are becoming common in manufacturing. Cyber criminals know that manufacturers will do anything to keep their chain of production up and running. 
  • Easy path to attack large enterprises: manufacturers often belong to a larger supply chain. Small suppliers can be an easier, indirect way for criminals to penetrate a large organization – everybody will remember the infamous cyber attack at a large retailer that started with their HVAC supplier.  
  • Insufficient protection of communications with contractors: if a manufacturer uses contractors for maintenance, administrative or accounting purposes, all communications should be protected and encrypted. The use of older protocols like FTP (File Transfer Protocol) or RDP (Remote Desktop Protocol) that were not initially designed with security in mind can present significant exposure if still in use without basic security upgrades. 
  • Cybersecurity in manufacturing can be lagging or in midst of major changes: this leaves this industry vulnerable to straight forward attacks on many systems that are now connected to networks or the internet without sufficient security controls in place. 

Cowbell has deliberately designed its Prime 250 standalone and admitted cyber insurance program to bring clarity of coverage and attend to the unique financial protection needs of each industry. Out-of-the-box, a Prime 250 quote will automatically offer coverages that are specific to each industry. This takes the form of 3 preset packages: Basic, Popular, Elite pre-configured to match known industry exposures.   

Cowbell goes further in its support of classes of businesses. Our Prime 250 insurance is one of the first admitted programs to offer coverage (through an endorsement) for contractual damages.  

Contractual Damages Endorsement for manufacturing: covers compensatory damages for which policyholders could be liable under breach of contract due to a cyber incident. 

In summary, this endorsement offers protection to manufacturing businesses in the event that they are unable to fulfill their contractual obligations due to a cyberattack. It also comes with its own limit and deductible. 

 For more information on Cowbell Prime 250 and to get your agency appointed, please sign-up on our agency page.


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