The Hartford Study Says Majority of Small, Midsize Businesses Worried About Computer-Related Exposures

Virus attacks continue to top the list of computer-related concerns among small and midsize businesses, according to a new survey of companies with fewer than 500 employees conducted by The Hartford Financial Services Group.

The national survey found that nine out of 10 businesses are concerned about computer-related incidents affecting their operations, with the vast majority (65 percent) worried about virus attacks, followed by breaches to network security (39 percent), and Web site security (30 percent.)

“Any company that uses e-mail is vulnerable to a virus attack, which can interrupt business for days or even weeks,” said Julia Feldman, technology coverage expert with The Hartford. “Unfortunately, many business owners mistakenly believe if they don’t have a Web site, they don’t need to think about Internet-related exposures.”

However, even those companies with Web sites tend to be uninformed and unprotected, The Hartford survey found. While, two thirds of small and midsize businesses have a Web site, less than half (45 percent) of those are aware that insurance exists to cover Internet-related exposures. Even among those who are aware, 68 percent do not carry it.

Nearly all of those with Web sites offer company information (99 percent) and e-mail access to the company (92 percent). Other popular services include advice or recommendations relative to their business (65 percent), links to other relevant Web sites (58 percent), online ordering of product or services (51 percent), and relevant information/articles written by outside sources (32 percent).

“Each of these features presents an exposure that may not be covered by a business’s current insurance policy,” said Feldman. “For example, a small service company with an informational Web site may not be aware that posting articles written by outside sources can create liability exposures related to copyright infringement, particularly if their Web site content is not reviewed by an attorney.”

While half of businesses with a Web site report being able to sell products or services via their site, online sales have yet to become a primary revenue generator, accounting for less than 10 percent of sales for the vast majority (77 percent) of respondents.

“Even if the volume of business transacted online is relatively low, collecting credit card information via one’s Web site can create liability exposures related to customer privacy, so it’s important to have the proper firewalls and security software in place,” continued Feldman.

Feldman urges businesses to consult with their insurance adviser to clarify their coverage needs and identify any coverage gaps. “Not all policies cover virus-related damage or other internet-related exposures, so it’s important to check with your agent or carrier to confirm your specific coverage limits.”

The nationally representative survey was conducted in March 2003 by an independent research company, Market Decisions Corp. It has a margin of error of +/- 5 percentage points.