We all heard about car insurance, home insurance or even life insurance, but have anyone heard about the cybersecurity insurance?
If your answer is (No) so this article is the right place, where will talk in more details about this new type of insurance, to know more and decide whether you need it in your business or not.
What is cybersecurity insurance?
As in the car insurance for example, the cybersecurity insurance provide you with a financial protection, but this time the protection will be against the cyberattacks loss, or in other words it protects businesses from financial losses stemming from cyber-related incidents such as: Data breaches, Ransomware, Network breaches, Data loss…etc.
The term itself starts early at 1990 but it wasn’t that famous, but now and after the wide use of the internet and online operations, and the cyber threats on other hands, the companies start to take the cyber insurance into account.
And because of that cyber insurance grew from USD 9.73 billion in 2021 to USD 11.75 billion in 2022, with further increases seen in 2023 and beyond. It reflected a compound annual growth rate (CAGR) of 20.7% over the past two years (link)
Examples of the incidents which can be covered
There are many scenarios related to the cyber threats and attacks, and which cyber insurance can cover them, such as:
- Data Breach: as this kind of incidents can affect business’s reputation and requires robust remedial measures.
- Network Security: A compromised network that harms a business which depends on technology for its operations.
- Regulatory Fines & Penalties: The business would be liable to bear costs associated with the investigation and payment of fines and penalties related to the cyber incident
- Malwares: where a special kind of software can affect the business system, and the operations as well.
- Ransomware: where hackers lock your data and demand a ransom for its release, cyber insurance can cover the ransom payment.
Also the cyber insurance could protect the business in case of any event that leads to cloud or outsource provider not being able to supply the agreed service.
What things can’t be covered by the cyber insurance?
Like most insurance products, Cyber Security Insurance won’t cover everything and all eventualities. Typical examples include:
- Any physical damage to your hardware (e.g. accidental damage, water damage, fire) and/or breakdown of the equipment.
- Any monies that you have transferred from your account as a result of/in response to any phishing attack.
- Any business devaluation due to theft of your Intellectual Property (designs, molds, specifications, etc.).
- Any costs you have incurred in improving your own technology and systems internally, including any software or security upgrades that you have purchased and installed following a cyber event.
Do I need cybersecurity insurance for my business?
So after reading the definition and the features, you may ask yourself whether your business needs the cyber insurance or no. , or is it important to your company or no.
The answer for these questions is in most of the cases is yes, as all companies now use the internet and the online services, and most of them keep their customers data stored somewhere. That’s why they are vulnerable and threaten by so many cyber threats.
The annual cost for the cyber insurance can range between 1000$ to 7500$ depends on so many factors such as:
- The company size
- The industry
- The existing security infrastructure in the company
- How much coverage
Conclusion
After reading the details about the cybersecurity insurance and what it is, it is very important to note that the cyber insurance is not a replacement of the cybersecurity procedures and process, and in any way you should always take the proper measures to protect your data and system against the cyber-attacks and the bad actors, following the best cybersecurity practice, then it is ok to think about the insurance point, as many cyber insurance policies require you to follow this.
