5 Things Companies Should Know About Cyber Insurance

The internet has brought forward many benefits and drawbacks. But it has made one thing evident, and this is the need for cybersecurity, which has introduced cyber insurance.

Today, most businesses have shifted online which has made consumer reach much more accessible. That said, this has also made companies and organizations all over the world more vulnerable to hacking and cyberattacks.

Every organization has learned to face the reality that it might be a target of a network or privacy security breach. Believe it or not, there have been one too many instances where large organizations have suffered cybersecurity breaches in the last couple of years.

This has led to organizations recognizing the financial and social consequences of cyber-attacks, and the difficulty they face in having to manage them, hence the need for a tool that helps them prepare beforehand.

Moreover, the loss and compromise of data always have a negative impact on the business, and at times businesses have to be liable for their-part data loss.

In this article, we’ll be discussing what cyber insurance is, its importance, and a few important things every company should know when it comes to cyber insurance. We hope you’re connected to high-speed internet such as Hargray Communications so that you don’t have to worry about losing connection during this read.

What Is Cyber Insurance?

Cyber insurance, also called cybersecurity insurance, is a contract that an organization can purchase to reduce the financial risks associated with conducting business online. The organization will pay an amount of money to the insurer, who on the other hand, will handle online cyber risks.

In fact, cyber insurance is a growing industry that a lot of organizations are slowly picking up. Companies that do decide to invest in this insurance, are often called early adopters. That said, you need to be aware that such insurances can change every now and then, keeping the nature of cyber risk in mind.

Cyber insurance ensures customer credit card number is kept safe, and further ensures customer data protection from being leaked. With how fast the internet is evolving, it’s become essential for companies and organizations to consider purchasing cybersecurity insurance.

For instance, if an individual purchases an online internet bundle, such as Spectrum Deals, they will share their credit card details, and it’s the organization’s responsibility to have cyber insurance that ensures the customer’s data is safe.

Things to Know About Cyber Insurance

As we shared earlier, cyber insurance protects customers from data loss, data theft, hacking, and similar cyber-attacks. In addition, this insurance also tries to help with defamation, crisis management, fraud, and data breaches.

Let’s take a look at a few things that all organizations should be aware of when it comes to cyber insurance.

It Does Not Cover All Events

It is important to be aware of the fact that cyber insurance is an evolving field of insurance coverage. In other words, insurance companies still haven’t exactly been able to determine how to adequately word this policy.

This is because insurers also want to protect themselves against any unintended payouts. So what does this mean for entities purchasing cyber insurance? This means they will have to review every detail of the policy very meticulously.

It’s important for organizations to understand what is covered, and what is not. For instance, cyber terrorism is usually never included in cyber insurance policies. While, on the other hand, cyber extortion and malware are usually included in the policies.

However, policy coverage might evolve with time and even overlap in the upcoming years. Companies and organizations who are trying to maximize their return on investment in cyber insurance, need to understand the risk associated with the specific business.

Cyber-attacks not only affect the business but their customers as well. Therefore, when you’re selecting an insurance provider, it’s important for your company to ensure that all third-party liability coverage is on par with your business.

It Does Not Absolve the Company From Its Responsibilities

In all honesty, the biggest problem in cybersecurity is still due to human error. If you didn’t know, cybercriminals tend to prey upon employees by tricking them into sharing confidential data, such as a customer’s credit card numbers.

This can be done in many forms such as videos, links, or pictures shared on social media or through emails. Moreover, phishing scams are more than capable of tracking employees by pretending to be trusted parties, alongside assigning their office equipment with ransomware and malware.

Cyber Insurance helps prevent monetary losses that happen due to data breaches. It can’t, however, help amend an employee’s mistake. Therefore, a company has to still be responsible for minimizing risk when it comes to cyber-attack.

Cyber Insurance and the Internet of Things

Businesses have started depending more and more on technologies connected to the internet, especially smart devices. This is also known as the “Internet of Things” (IoT). The many possible entry points used by businesses online through IoT can easily affect an organization’s insurance needs as well.

IoT cyber-threats can result in serious damages apart from data loss. For instance, property insurance policies usually cover bodily and physical harm, and a cyberattack may also cause similar harm.

However, this type of coverage is almost non-existent in cyber insurance policies. It’s important for an organization to establish what type of insurance coverage is required, and then perhaps, you could negotiate limitations on the coverage policy.

Moreover, as an organization, it’s your duty to determine what type of coverage can be implemented in particular loss scenarios. In other words, before purchasing and further negotiating the policy coverage, you need to establish the possible losses an IoT attack may cause to you and your customers.

This will allow you to determine the deductibles and also create a risk profile.

The Cost of Cyber Insurance

Although there’s no fixed price for cyber insurance, there are a couple of factors that both directly and indirectly determine the cost of cyber insurance. This includes the type of industry, organization size, regulatory requirements, company’s footprint, and the kind of coverage you need.

Here’s more about each of these factors:

• Type of Industry: Industries such as banking and healthcare are usually the prime targets of hackers. These industries can expect to buy cyber insurance at a much higher rate.
• Organization Size: This refers to how big or small an organization is. The larger the organization, the greater the cost of a cyber insurance policy.
• Regulatory Requirements: Regulatory requirements are requirements that an organization must meet, and at times, this might lead to higher costs for cyber insurance.
• Company Footprint: This is rather similar to organization size. In other words, the more potential a company had to be attacked, the greater the cost of cyber insurance.
• Coverage: This refers to how much coverage you want. If you want coverage for all types of cyber-attacks, then you’ll have to spend more.

Do You Need Cyber Insurance?

Well, for starters, almost every business ought to consider cyber insurance. This is particularly important for organizations that deal with consumers and their personal data. For instance, energy, utilities, telecoms, financial, business, and professional services are some of the industries where cyber insurance is crucial.

If you operate in one of these industries, you don’t want to be highlighted in the media about data loss alongside negotiating a settlement with a hacker.

How to Prepare for a Cyber Attack?

Although we have shared what companies and organizations ought to know about cyber insurance, it’s still important to be prepared for a cyber-attack. These attacks have no time and date, they happen unpredictably.

Here are some things you can do to prepare for a cyber-attack:

• Distinguish the warning signs leading to a data breach, even though many cyber-attacks happen out of nowhere.
• Always prepare a breach response strategy. The sooner your customers and stakeholders are alerted, the better the outcome you can expect.
• Prepare a breach response team. This allows the company to focus on other important aspects of a breach, while the response team works to assure clients and stakeholders.
• Always have data encryption, as this prevents sensitive data from being hacked.
• Arrange cybersecurity prevention training for your employees, as this will allow them to be better prepared.
• Purchase cyber insurance coverage, to ensure your organization’s assets are covered.
• It’s important for companies to update their cybersecurity policy. These policies have specific expectations of what employees can do with company technology and data.
• Organizations should determine what threats they are likely to face in their industry.

Although there’s no way to assure that your business won’t be subject to a cyberattack, there are things that you can do to be well-prepared if there’s a security breach at any point in time.

The Risk of Not Being Cyber-Savvy

From understanding what cyber insurance is to be better prepared for a cyber-attack, it’s important to know what risks your company is exposed to if your employees are not cyber-savvy.

Just an employee opening an unknown attachment in a phishing email to clicking on a shady link can bring the entire organization to its knees. This, in many instances, has led to businesses shutting down their operations.

As we shared earlier, human error is a cybercrime risk for any business. Hence, if the employees of a company aren’t savvy, they will open your business to a cyber-attack. This might make it much harder to convince the insurer to pay out if a breach happens.

Therefore, purchasing a cyber insurance policy will need an organization to share information about their security controls. Now, this might include procedural, technical, and human controls. That said, some insurers may offer discounts if your company already has cyber security defenses set up.

On the other hand, some insurers might even refuse to offer their services if you have zero or basic level of cyber security, and are at high risk.

How to Choose Cyber Insurance?

Generally, cube reinsurance pricing depends on the potential organization’s type of industry and how much revenue they generate. To qualify for coverage, the entity has to submit documentation to a security audit which will be appointed by the insurance company.

The results shared by the security audit and the documentation will factor as to how much coverage is the company applicable for. As of recently, the cyber insurance market is growing, but it’s an inside that is constantly evolving.

However, since the cybersecurity industry is still growing, there isn’t any actuarial data that can help lower costs based on what security protocols are most effective. All in all, companies should not solely rely on cyber insurance. Instead, they should take the responsibility to guide employees on protecting company data at all costs and reduce human error.

Therefore, when you’re choosing a cyber insurance policy, you need to understand what coverage you will get and if it ticks all your requirements. In addition, you need to evaluate the risk your industry will face from time to time.

Final Thoughts

It isn’t difficult to understand what cyber insurance is, but what’s complicated is how it works and whether your organization needs it.

Like with any other insurance, you will purchase cyber insurance to protect you and your organization if there’s a security breach. However, keeping all the technicalities aside, what’s important is prevention.

Prevention is the key to tackling cyberattacks because there are some damages that not even a cyber insurance policy can help cover. So, what’s the solution here? Well, you should always consult with your employees about the importance of internet safety and protecting consumer data.

Moreover, you should also implement security policies and create virtual training for remote employees. That said, cyber insurance companies should encourage organizations to further improve security so that they can purchase insurance at a lower cost.

We hope you now have a better understanding of what cyber insurance entails, and the importance of getting insured. Ultimately, cyber insurance coverage is important for all business types, and it doesn’t matter how small or big your company is, because there’s always confidential and private data to protect.

Feel free to drop questions if you’re still unsure about how to proceed with cyber insurance!