Insurance
Cyber Insurance: Your guard against growing cyber threats
One of the maladies of the digital age is the fast-paced rise of cyber threats. Today, businesses find their systems, data, and networks vulnerable to cybercrimes like phishing, ransomware, malware, data breaches, and other forms of cybercrime. According to Cybersecurity Ventures, cybercrime costs, worldwide, are likely to hit a whopping $10.5 trillion annually.
This is a signal to businesses to tighten their cybersecurity measures. While cybersecurity tools may help prevent cyberattacks, your sensitive data can still be compromised due to cyber risk. This could lead to severe financial repercussions as the business is liable to pay for such damages.
Cyber insurance minimizes a company’s liability to pay for damages caused due to cyberattacks. Cyber insurance works with Tech E&O (Error and Omissions) services. Tech E&O focuses on cybersecurity gaps that harm a business and cyber insurance provides financial coverage for cyber attacks on your business.
What is cyber insurance?
Cyber insurance is a product that protects businesses from the cost of cyber threats that affect their infrastructure, information governance, and information policies. It helps businesses mitigate the risks due to cyber threats by providing coverage over and above traditional insurance products and commercial liability policies. Businesses need to pay the cyber insurance company a fixed monthly/quarterly fee in exchange for transferring some of the risks to the insurer. The fee or insurance premium charged varies. Cyber insurance underwriters assess businesses based on various factors, an important one being the cybersecurity measures the business uses. Businesses with a robust cybersecurity strategy usually pay lower insurance premiums. Another factor that the insurer looks into is compliance with regulations.
Cyber insurance provides coverage and protection against cyber threats just like how a traditional insurance policy provides coverage against physical risks and natural disasters.
Cyber insurance policies include first-party coverage where they provide for the losses that directly impact their client. They also provide third-party coverage where they provide for the losses that enterprises that have a business relationship with the client company, may incur due to cyber-attacks on the company.
Cyber insurance also provides coverage for expenses related to the remediation process like the cost of investigation, crisis communication, legal services, and compensation to customers.
Why do you need cyber insurance for your online business?
Cyber insurance is necessary for a business that creates, stores and manages digital data. The risk of cyberattacks and the financial repercussions of such attacks are so high that cyber insurance appears to be the only feasible solution to manage such cyber incidents.
Cybercrimes are becoming more sophisticated and businesses across sectors are vulnerable to cyber threats. While a business may adopt the best cybersecurity measures, the possibility of cyberattacks cannot be ruled out. Cyber insurance protects the business financially and helps manage the risk of cyberattacks.
Data shows that the average cost of a data breach can be as high as $ 4.35 billion! A financial loss of this scale can have deep-rooted impacts on the business. Cyber insurance provides the required support to the business to recover from such losses.
Many countries and states have stringent compliance laws regarding data breaches and cyber incidents. Non-compliance can lead to high penalties. Cyber insurance provides coverage for these potential fines and the legal defense required.
Cyberattacks can lead to reputational damage in addition to financial losses. Cyber insurance provides crisis management support in addition to public relations support in case of a cyber incident. This helps businesses repair and maintain their reputation.
Cyber insurance also provides businesses access to experts and resources that help them manage the cyber incident effectively and recover from it quickly.
According to DataStream, 89% of the businesses that invested in cyber insurance said that “it covered all their losses and they were glad that they had it.”
As cybercrimes continue to increase in numbers and sophistication, cyber insurance emerges as one of the most effective solutions to mitigate the risk of cyber threats. However, cyber insurance is not a replacement for cyber defense. Businesses need to ensure that they implement cybersecurity measures to prevent cyber-attacks. Cyber insurance augments the cyber defense strategies of the business. It protects in case a cyber incident occurs despite the cyber defense strategies deployed by the business.
How can Infosys BPM help?
Infosys BPM offers insurance BPO services that can be customized according to the specific needs of a business. Our innovative business process management solutions for insurance help our clients build robust insurance plans for customers. We specialize in providing a wide range of services in the insurance sector including property insurance, workers' compensation, E&O insurance, and more!
