Today’s organizations thrive on technology. To reach prospective customers, they employ a hybrid of transactions over the Internet, email, and social media. Cyberattacks occur through these gateways.
There is a higher possibility of criminals, insiders, and even countries launching cyber-attacks today. Such a grim assessment result in sizable losses for organizations of any size anywhere. It is why a proactive approach must drive cybersecurity initiatives in security awareness. A risk management plan includes how organizations avoid, accept, control, or transfer risk. Cyber insurance is essential in risk transfer.
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What is Cyber Insurance?
Cyber insurance is essentially an insurance plan. It protects businesses from the adverse impact of cybercrimes. Ransomware and malware attacks are examples of such crimes. Others are DDoS (Distributed Denial-of-Service) attacks. It also includes other methods exploited to compromise sensitive data or a network.
Cyber-security is also known as cyber liability insurance coverage (CLIC), cybersecurity insurance, or cyber risk insurance. These products help offset the costs involved with recovery when a cybersecurity breach occurs.
The history of cyber insurance dates back to errors and omissions (E&O) insurance, before gaining traction in 2005. The total value of premiums is forecast to reach $7.5 million by 2020. PwC reports that one-third of US companies are investing in some form of cyber insurance.
What Does Cyber Insurance Cover?
Organizations realize how crucial cyber insurance is. But, many are not clear on what it covers. It typically covers expenses linked to first parties, and also third-party claims. There is, however, no underwriting standard for these policies. Current reimbursable plans of cyber insurance include:
- Business losses
- Privacy and notification
- Lawsuits and extortion
Cybersecurity Defense is not Cyber Insurance
Cyber risk insurance is not a replacement for cybersecurity defense. Cyber risk insurance is a great way to mitigate the loss and destruction resulting from a breach. It should complement cybersecurity technology within the overall cyber risk management.
Cyber risk insurers analyze the strength of a company’s cybersecurity position before issuing a cyber insurance policy. For better coverage and access to enhancement coverage, healthy security postures are necessary. Fragmented enterprise security approaches can make it difficult for insurers to grasp an organization’s security posture fully. It can lead to poorly targeted or inadequate purchases by insured companies.
A business that has not invested appropriate cybersecurity solutions may not qualify for insurance, or it could be limited and pricey.
Why a Business Needs Cyber Insurance
An organization that stores and maintains customer data online, or collect payment information, or uses the cloud needs to cater for cyber insurance in its budget. This Everycloud cybersecurity facts infographic reveals that 43% of cyber-crimes target small businesses, while 60% of companies suspend activity within the six months after an attack.
The global economy loses between $375 – $575 billion to cybercrime annually, according to the Centre for Strategic and International Studies (CLIC). Organizations have to decide how much they can lose in the event of a cyberattack, or if cyber insurance is essential to defray the costs of unpleasant circumstances.
How to Begin
Companies may begin by creating a cyber risk profile, and a list of expenses to the payout will cover if a cyber-attack occurs. Then, they can factor in third party costs. Several insurers have an insurance calculator on the web to help organizations enumerate coverage and estimate costs. Research on cyber insurance providers can then begin. The US Chamber of Commerce is an excellent place to start.
Chris is a Computer geek, writer, and gamer. He is interested in any aspects of the PC industry and videogames. Freelancer in his nature, he is willing to get experience and knowledge from around the world and implement them in his life.