These cyberattacks are quite dangerous and can cause moderate to severe damages for organizations (large or small). A risk management plan needs to be maintained by the organizations which must decide whether to accept, avoid, control or transfer the risk. Under the process of transferring risk, cyber insurance comes into the limelight.
Cyber Insurance Insight
A cyber insurance policy, also referred to as cyber liability insurance coverage (CLIC) or cyber risk insurance, is formulated to help an organization lessen risk exposure by equalizing costs covered with recovery right after a cyber-related security crack or similar event. In 2005, cyber insurance began to catch pace. According to the current Cyber Insurance Market Analysis, the total value of premiums estimated to reach $7.5 billion by the year 2020. Moreover, the PwC stated that about one-third of the companies in the U.S. currently purchase some or the other type of cyber insurance.
Expenses Covered Under Cyber Insurance
It is known that, cyber insurance primarily covers expenses linked to first parties along with claims linked to third parties. Below mentioned are some of the general reimbursable expenses:
- Investigation: Forensics investigation is required to determine what occurred, how to avoid the same type of breach in future and how to fix damage. The investigations may also involve the facilities of a third-party security firm, along with coordination with law implementation and the FBI.
- Business losses: There are chances that a cyber insurance policy might include similar items which are covered by an errors & omissions policy, as well as financial losses experienced by , business interruption, network downtime, data loss recovery as well as costs involved in dealing a crisis, which may also involve mending reputation damage.
- Privacy and notification: It includes essential data break notifications to customers and other hampered parties, which are directed by law in many jurisdictions. It also includes credit monitoring for varied customers whose information may have been breached.
- Lawsuits & extortion: It includes legal expenses linked with the release of private information as well as legal settlements, intellectual property and regulatory fines. This might also include the costs related to cyber extortion, such as from ransomware.
What All Factors to Focus as a Cyber Insurance Buyer?
A number of well-known insurance companies provide cyber insurance policies. Some of them include Allianz, Travelers, and Chubb Philadelphia. According to insurance industry watchers, clients are soon going to expect cyber insurance to become a portion of every business insurer’s product catalogue. However, similar to business insurance, the coverage of cyber insurance varies by policy and insurer.
While comparing policies among insurers, focus on the following special limits and circumstances:
- Does the insurance firm provide one or more forms of cyber insurance policies or is the specified coverage only an extension to an already existing policy? In usual cases, a stand-alone policy is tagged as the best and more widespread type.
- Always make sure to equate deductibles thoroughly among insurers, similarly to what you do with vehicle, health and facility policies.
- Does the policy covers an attack to which the firm or organization falls victim or focuses only on targeted attacks contrary to that organization in specific?
- Does the policy insure non-malicious actions proceeded by an employee? It is important that this is part of the E&O coverage which relates to cyber insurance as well.
Need for Cyber Insurance by Businesses
Any organization which stores and maintains information related to customers or collects online payment details, should work to add cyber insurance in its budget. Currently, the cyber insurance market trends are on a rise, since attacks against all business are increasing.
Small businesses usually think they are safely placed away from exposure, however, Symantec spotted that over 30 percent phishing attacks in 2015 were tossed against organizations which possessed less than 250 employees. Moreover, Symantec’s Internet Security Threat Report in 2016 reveals that 43 percent of the attacks in 2015 were focused on small businesses. Each organization need to decide if they can stake the amount of money, or install cyber insurance to cover the costs for what might occur.