It is not just about paying coverage, the insurers now help their clients to adopt a better cybersecurity approach.
Cyber attacks of all kinds are becoming more aggressive, diverse, and planned better. They are a serious problem for all organizations and, as a result, many companies are inclined to cyber insuring as a tool to defend themselves, or minimize the damages caused by an incident.
What Is Cyber Insurance?
Cyber insuring, also known as insurance of digital assets, is an insurance policy that helps organizations or individuals protect themselves from the consequences of cyber and hackers’ attacks. A cyber insurance policy can help for minimizing business interruption caused by a cyber incident. It can potentially cover the financial expenses for some aspects of the attack and overcoming it.
Nevertheless, a form of cybersecurity can substantially help your business in the event of an attack. In the end, companies are responsible for their own cybersecurity and this is not something that can be handed to the insurer. Briefly, cyber insurance does not automatically solve all problems and risks, as well as it will not prevent a breach.
Who Needs Cyber Insurance?
- Every business with an online component or one that handles and transfers data can benefit from cyber insurance.
- Each organization relies on technology for its operations, and today that is almost every business.
Personal data, intellectual property, or sensitive financial details are interesting for the cybercriminals who might be able to perform a breach into your network and steal your virtual assets.
There is a real danger that hackers can harm an enterprise through encrypting like ransomware. The cyber insurance policy that covers ransomware can help a lot to those that have become a victim of such attacks, to find an exit from this complication.
How Much Does Cyber Insurance Cost?
The price of the cyber insurance policy depends on multiple different factors, including the size of the business and the annual revenue; the business industry; the data type that the business handles; and the overall network security.
If we consider that an organization has a low level of cyber defense, or it has already been attacked by hackers, it would probably have to pay a larger amount for a cyber insurance policy as opposed to a company with a reputation of being highly secure. In order to reduce the insurance premium, the company should follow the recommendations for avoiding the threat source given by the insurer.
Sectors like healthcare and financial institutions will probably discover that the cyber policies cost them more because of the sensitive character of the data they handle.
What Does Cyber Insurance Cover?
The different insurers can offer protection from various risks but as a whole, the cyber insurance’s goal is to cover indirect expenses connected to a cyber attack that the organization has fallen victim to.
This might include data recovery work, forensics, and lawsuit expenses. Most of these activities are standard procedures caused by a ransomware attack – one of the most destructive incidents that an organization can face.
In some cases, cyber insurance companies pay also for the actual extortion amount. However, this depends on the local regulations as in some countries paying bribery is illegal.
On the other hand, the regulatory authorities and the information security specialists do not recommend paying off because this act encourages cybercriminals to carry out more attacks.
Business Emails Compromise phishing (BEC) is another form of a cyber attack that might cost the business a huge, sometimes six digits long amount. In such attacks, criminals introduce themselves as financial directors, executives, or other important persons in the organization inviting the employees to process payments. In some cases, the insurance policies might cover the money lost in a BEC scam. This will be a specific type of policy, though, which can be added to the standard cybersecurity insurance.
It is important for organizations to be informed about the conditions necessary for the insurance in order to cover damages from other cyber attacks as well. An example is the detrimental DDoS (Denial of Service) attack.
It is essential to determine whether the insurance company already provides some kind of cybersecurity coverage as part of its business interruption or home insurance policies. Existing insurance like that might ensure a decent security level, as well as serve as a base for structuring cyber incidents policy.
What Is Not Covered By Cyber Insurance?
There are a few things that might be essential for the organizations but there is a high chance they are not covered by cyber insurance. It is crucial to clarify this question in order to manage all assets of the company properly. For instance, financial claims following a loss of intellectual property are usually not covered by cyber insurance. The same goes for the consequences of using illegal software.
The Future Of Cyber Insuring
The way that cyber insuring functions are yet to develop as the frequency of cyberattacks is constantly increasing and cybercriminals become more aggressive and motivated. Overall, it can be expected that insurers will not be prone to offering policies to companies that are not paying attention to their cybersecurity.
Payment of the insurance claim is an entirely passive activity and is expensive for the provider of the insurance. Therefore, some insurers have adopted a proactive approach to cybersecurity. In the event of a data breach, they do not just offer to pay coverage but can also take the initiative to actively help their clients acquire a better approach regarding their cybersecurity.