As the world continues to enter a new chapter in its storied technological history, the threats that come with the internet are also multifold. Hacking, phishing, ransomware and data breach attempts are a serious threat to companies that rely on technology to conduct its business operations. In the post-pandemic world, cyber security and cyber insurance have become more important than ever before.
So who needs cyber insurance for 2022? While large multinational companies are in need of cyber insurance, small and medium scale companies could also use it to prevent cybersecurity threats like hacking, phishing, and data breach attempts. Everyone can use cyber insurance, especially if there’s sensitive data that you’re protecting, like those of other people.
What’s Cybersecurity Insurance
Cybersecurity insurance (also known as cyber liability insurance or just cyber insurance) is a contract designed to reduce the financial risks faced by companies. Every business firm at some point in its lifetime will find itself at risk of losing sensitive or important data which can result in significant losses to finance, business continuity, and reputation. The insurance policy trades a monthly or quarterly cost for the transfer of some risks to the insurer.
In other words, cybersecurity insurance aims to cover all costs, fees, and other responsibilities related to legal requirements arising from cyber breaches while reducing risk exposure. The commonality of cyber insurance is found in the fact that it’s made for businesses to use to defend themselves against ransomware, spyware, and denial-of-service attacks.
The expenses for legal action, inquiries, and even an assault that follows are covered by insurance claims. Recent studies show that nearly 44% of the companies are facing data breach which costs them about 5 million dollars. Companies which take cyber insurance are more adaptive and safe.
Who Needs Cyber Insurance?
The most important aspect of cyber insurance that companies and individuals need to understand is that it’s not a luxury that’s meant only for huge multi-million dollar businesses. Everyone from individuals to large businesses need and benefit from cyber insurance policies. Taking precautionary insurance plans help minimize risks from unprecedented cyber attacks.
The risk of cyberattacks and data breaches have gone up over the last couple of years. A singular cyberattack can potentially send your entire business under, and thus paying for an insurance plan to cover the cost of damages is worth it in the long-run. Every company needs cyber insurance to ensure that they can reliably recuperate the losses and regain smooth business functioning in the event of a cyberattack.
Small and medium scale companies are just as vulnerable to a cyberattack as a fortune 500 company. Cyber insurance is a safety measure that enables firms regardless of size to adapt, develop better services and remain competitive even after a data breach. It not only helps them to face their financial risks, it also gives them backup support by providing network security.
Why Is It Essential in 2022 ?
Cyber insurance is one of the most popular strategies for reducing the risk of a cyber security catastrophe. Policies give organizations the tools they need to put incident response procedures like forensic analysis, legal help, and public relations aid into action.
Standard company insurance policies frequently only cover expenditures associated with technological problems, including corrupted hard drives and misplaced equipment, leaving out these operations. Despite undeniable benefits in risk management, less than 50% of companies have gone for cyber insurance policies.
Cyber insurance is becoming increasingly important with nearly 1300 publicly announced data breaches in 2021. A company can lose upto 38% of its total business share through a single cyberattack and can lose on average $180 per record of personally identifiable information lost. A ransomware attack can cost the company anywhere between 1 to 5 million dollars on average.
Important industries such as healthcare, finance, pharmaceuticals, technology and energy are the 5 most vulnerable industries to cyberattacks in terms of leading the total cost of becoming a victim of a data breach. The global average total cost of a breach was around $4.24 million in 2021.
Cyber insurance policies ensure that these losses are covered by an insurance agency which minimizes the risk of solvency. It may often be too late to consider which policies can save your business after a cyber attack and as such opting for a policy that suits your requirements ahead of time is a safe precaution.
After a hack, a startling 60% of SMBs fail. By covering for things like customer credit monitoring, legal fees, fines, and other charges following a cyberattack, cyber liability insurance helps cover the costs. The cost of a data breach has been at its highest in over 17 years, and as such any company that has moderate online presence and deals with sensitive information should consider cyber insurance policies.
What Does Cyber Insurance Cover?
Cyber security insurance coverage varies drastically depending on the scope of the policies offered by the insurance company. Typically, the costs covered by a cyber insurance policy include the following:
- Costs due to damage to technology and software of a company that may be critical to resuming business operations.
- Negotiating and paying off ransomware demands.
- Informing and notifying customers whose data was compromised due to the cyber attack
- Financial losses that the company may have incurred during the downtime of the company following a cyberattack.
- Costs involved in recuperating the data that was lost due to the attack and containing the data breach
Pointers for Getting a Cyber Insurance Policy
The amount of claims filed has increased significantly as firms experience more cyberattacks. In reaction, insurance firms tightened eligibility requirements and substantially raised prices. Stricter regulations and higher costs have had a particularly negative impact on businesses in high-risk industries, such as those that process payments and hold significant amounts of sensitive data. With that being said, here are few pointers for getting better cyber insurance:
- Stick to compliance frameworks: Different compliance frameworks may be mandated by governing bodies for different sectors. For example, HIPAA is a requirement in the healthcare sector, while PCI DSS may be required if your business processes credit card data. Adhering to these frameworks can raise your coverage and premium.
- Invest in strong network security: Cyber insurance is never a replacement for cyber security measures. Insurance providers will take the client organization’s level of network security into account when calculating premiums. As such, businesses should make active investments such as installing MFA across the entire organization, getting a good firewall, and holding regular security training sessions on phishing and ransomware.
- Recognize vendor security: Verify the security and compliance procedures of prospective or existing vendors to better safeguard your business against external threats. You should demonstrate to insurance companies that you have done extensive research and have taken third-party security concerns into account.
Secure your Company and Systems with Cybersecurity Solutions from Abacus
It’s evident that in contemporary times, almost every business or organization relies on the internet for coverage. It can be a tedious affair to consider all your cyber insurance options, analyzing your requirements and determining how much coverage is needed for your business. At Abacus, we understand the need for reliable cyber security measures and good cyber insurance coverage in the development of risk mitigation plans.
You can rely on us to deliver comprehensive IT solutions that protect the business from various cyberthreats. Our helpful and competent IT specialists are always available to train staff members on cybersecurity precautions while also addressing other IT-related issues. Contact us today to get expert opinions and IT consultation services.