As with any insurance – cyber insurance included – one big benefit is the peace of mind that comes with having it.
Cyber insurance is a sub-category of general insurance that covers businesses and individuals against internet-based liability and risks. Technology, social media and transactions over the Internet play key roles in how most individuals and organisations conduct business. Those vehicles also serve as gateways to cyber attacks. Whether launched by run-of-the-mill hackers, criminals, insiders or even nation states, cyberattacks are likely to occur and can cause moderate to severe losses for individuals and organisations large and small. As part of a risk management plan, organisations routinely must decide which risks to avoid, accept, control or transfer. Transferring risk is where cyber insurance comes into play.
Cyber insurance has been around for more than a decade. Market research firm, Progressive Markets, projects the global cyber insurance market to hit more than $29 billion by 2025. Cyber insurance can’t protect you from cyber crime, but it can keep you and your business financially stable should a significant security event occur.
There are generally two levels of cyber insurance coverage: first-party and third-party.
First-party coverage encompasses direct losses to an organisation or individual, whereas third-party coverage extends to claims and legal action taken by customers or partners.
Coverage differs by provider, but common coverage areas include data breaches, identity theft, and personal data theft. This coverage has expanded more recently to scenarios like data damage, network failure leading to business interruption, cyber extortion, the failure of outsourced cloud service providers and forensic investigation costs. Meaning the costs associated with uncovering the cause and impact of an attack. There are also the hefty legal fees, fines, and costs associated with recovering compromised data, repairing systems, restoring the personal identities of affected customers, and notifying customers of breaches. The core idea behind cyber insurance is to help you recover from a data breach or cyber attack by mitigating all the costs that crop up in the aftermath.
Once again, cyber insurance is not a replacement for cybersecurity. It’s not a tech solution. Cyber insurance coverage is your personal or professional fail-safe for if and when a breach or cyberattack occurs, and you’re left with a mountain of costs to restore your business, deal with customer lawsuits, or reclaim your digital and financial identity. You should still have a comprehensive suite of security tools in place, including antivirus and ransomware protection, as well as encryption software. Not forgetting password managers and two-factor authentication (2FA) to protect against identity theft. As for whether buying cyber insurance is worth it or not, it’s all about peace of mind. Do potentially high premiums for insurance you may not need offset the risk of having your identity stolen or your company’s infrastructure breached and data stolen? If you choose the right policy that protects exactly the coverage areas and attack vectors you need, it may be worth the money as cybersecurity incidents increase in frequency and severity across the web.
At the same time, it’s worth asking whether insurers can even afford the skyrocketing risk. As breaches and identity thefts continue and providers are saddled with the cleanup costs, is cyber insurance yet another bubble waiting to burst? I think we’ll save that discussion for another article…
There’s a laundry list of cyber insurance plans out there offered by traditional providers and security-specific companies. At Optek, we believe that you should engage your existing insurance provider to see about whether or not this type of coverage would be beneficial for you.