Importance of Cybersecurity Insurance
Undoubtedly, 2020 and 2021 were record-breaking years for cyberattacks targeting US and global organizations. Experts reveal, every 11 seconds, there is a new attack somewhere on the web in 2021, up from 39 seconds in 2020. When cyberattacks occur, they can result in devastating damages and losses. In the current highly uncertain cybersecurity environment, organizations need to prioritize the right cybersecurity insurance coverage. Cybersecurity insurance is designed to mitigate losses from many cyber incidents from lost revenue, network damage, data breaches, and business interruption. This blog looks at the benefits of cybersecurity insurance.
Cyberattacks statistics to think about:
- Cybercrime is up 600% due to the COVID-19 pandemic
- As of 2020, the average cost of a data breach was $3.86 million.
- Only 31% of small and medium-sized businesses (SMBs) had cyber insurance coverage in 2019.
- The average time to detect and mitigate a breach in 2020 was a whopping 207 days
- Cybercrime is projected to cost the world $10.5 trillion annually by 2025
- Nearly 43% of cyberattacks target small businesses
What Is Cybersecurity Insurance?
Cybersecurity insurance is a type of insurance policy that covers expenses, business losses, business interruptions, fines, and penalties that organizations can suffer due to a data breach. The policy also protects businesses in the event of ransomware attacks. Cybersecurity insurance is specifically designed to cover losses that other policies don’t cover. Most policies include first-party coverage that applies to losses directly impacting a company and third-party coverage, which covers losses suffered by others after a cyber event or incident. These policies are typically sold by most of the same vendors that provide traditional insurance related to business protection.
Who Needs Cyber Insurance?
Ideally, everyone and every business that creates, stores, and manages electronic data online, including but not limited to customer contacts, customer sales, and any other crucial data, can benefit from cyber insurance. While cyber insurance is essential for everyone, four sectors are most impacted by cyber-attacks. These include medical and healthcare facilities, businesses that take credit cards or electronic payments, banking/credit/financial institutions, the construction and manufacturing industry, and companies that provide professional services.
Benefits of Cybersecurity Insurance
In the current highly tumultuous environment, purchasing the right cyber liability insurance can help mitigate damages and possibly save your business millions of damages in case of a cyberattack. Cybersecurity insurance is typically customized to meet the specific needs of a company. The following are some of the benefits of having cybersecurity insurance in place:
Provides coverage beyond general liability
Cybersecurity insurance covers things that might not be included in standard general business insurance. Typically, general liability policies may not protect organizations from losses related to cyberattacks. Since your data is a lot more valuable than your physical assets, there is a need to have the proper data protection in place when you are insuring your physical assets. By supplementing your general liability insurance with cyber coverage, you get peace of mind knowing your company’s finances, operations and reputation are well protected.
Provides legal support
Apart from covering financial losses that result from cyber events and incidents, cyber risk coverage also helps with remediation costs, including payment for legal assistance. After every cyber incident, there is a high likelihood that affected individuals may seek legal action. Legal claims can be costly, and cyber liability insurance helps businesses afford proper legal representation following a cyber-attack.
Provides data breach coverage
In the event of an attack, you are required by law to notify all the affected parties, ultimately adding to the related data breach costs, including the cost of security fixes and possible legal actions by those affected by the breach. Cyber security insurance includes coverage for all these costs to guarantee adequate protection of your data from further breaches,
Help promote best cybersecurity practices
Before an organization is covered by a cybersecurity policy, it must meet specific requirements that promote the best cybersecurity practices. Robust cybersecurity insurance can help promote the adoption of preventive measures in return for more coverage. Ideally, cyber insurance companies base their premiums on an insured’s level of protection, thus encouraging the implementation of best practices, including cybersecurity awareness training for staff, and more.
Loss reimbursements due to business interruption
A cyber-attack ultimately leads to IT failure that results in costly downtimes and interruptions. Any interruption in business operations leads to massive costs in both time and revenue. Studies reveal the cost of downtime in business averages around $260,000 per hour. Cyber security policies can cover losses related to business interruption and downtimes.
After a cyber-attack, your organization is required by law to carry out a comprehensive investigation that determines the cause and the extent of a breach. The ideal policy can reimburse for the costs related to forensics, including the costs of hiring expert help. Additionally, various policies provide 24/7 support from specialist cybersecurity professionals, which can be integral to achieving a well-protected IT environment.
Cyber extortion coverage
Ideally, most cyber attackers are motivated by financial gains. Ransomware and other attacks are designed to steal and lock critical data from businesses and organizations until a steep ransom is paid. These attacks have increased in frequency and severity, with recent statistics revealing that cybercrime is up 600% due to the COVID-19 pandemic. Even with robust safeguards in place, cyber-attacks can still affect you. Therefore, it is critical that you seek cyber liability insurance, which can help you recoup the losses related to cyber extortion.
Cybersecurity Insurance Can Help Mitigate Risks
Security breaches are becoming more common with each passing day. Cybersecurity insurance or cyber liability insurance is a type of contract that an organization or entity purchases to help reduce the financial risks and damage of possible cyber-attacks. The insurance policy typically transfers some of these risks to an insurer in exchange for a monthly, quarterly, or yearly fee. Although Cybersecurity insurance is a new and emerging industry, many companies and organizations are purchasing it today in the wake of a spike in attacks.
If you need help to protect your IT assets and reduce the cost of your insurance, contact Mathe Inc. today. Our IT cybersecurity experts provide reliable cloud infrastructure, network services, and cybersecurity solutions to protect your organization from a range of ever-evolving threats. Contact us today to learn more.
With over 35 years in the business of supporting and implementing technology for the SME market, and 6 years previously in Corporate IT and Voice. I have seen a great deal of change. The only common thread is I have always focused on the Business Wise application of Technology. We always try to look 5 years ahead of the current technology to make sure our clients are on the right track to meet current and future needs.