Cybercrime is a fast-growing segment of the insurance industry, with cybercrime insurance expected to be worth around $1 billion by 2020. And for good reason. With hackers discovering new vulnerabilities in software on an almost daily basis, businesses of all sizes are at risk of falling victim to cybercriminals. In fact, according to research from Fidelis Cybersecurity, a record number of security breaches were reported in 2017 – with many businesses having their personal data stolen and published online as a result. Theft and fraud cost businesses an estimated $600 billion worldwide every year.
With this in mind, it’s prudent for companies to consider cybercrime insurance as part of their risk mitigation strategy. Read on to learn more about cybercrime insurance, including how it works and why you need it…
What is cybercrime insurance?
Cybercrime insurance protects businesses against the cost of cybercrime incidents, such as payment fraud or the theft of sensitive data. The first type of cybercrime is when a business transaction is interrupted by a fraudulent payment – for example, a customer buying something online with a stolen credit card. The second type is when a hacker steals data from a business and publishes it online. This can include customer information like full names, addresses, and credit card details, as well as sensitive internal data like employee W-2 forms and healthcare information.
Why you need cybercrime insurance
According to the Ponemon Institute’s Cost of Cyber Crime Study, the average cost of cybercrime per company is $355,000. This means that smaller businesses, which generally have fewer resources to invest in cybersecurity, are particularly at risk. You can mitigate your risk of falling victim to cybercrime with the right cyber insurance policy. Cyber insurance provides a lump-sum payout in the event that your company suffers a cyber breach. This will help you to cover the costs involved in investigating the breach and responding to it, as well as any financial losses incurred as a result.
How cybercrime insurance works
When you buy cybercrime insurance, you’re actually purchasing a combination of different types of insurance policies: cyber liability insurance and data breach insurance. Data breach insurance is a type of cyber insurance that covers the cost of investigating and cleaning up a breach, as well as the cost of litigation and regulatory fines that may arise from it. In other words, it covers the cost of responding to the breach. Cyber liability insurance is the other type of policy included in most cybercrime insurance policies. It covers the cost of defending yourself against lawsuits related to the breach. This is important because, while you may be able to tackle the costs of response yourself, you are legally liable for the damages caused by the breach.
Who provides cybercrime insurance?
Allianz, AIG, Chubb, and Lloyds are just some of the major insurers that provide cybercrime insurance. You can also look to specialty insurers, like Fidelis Cybersecurity, to find an insurance policy tailored to your business. Insurers that focus on cyber insurance are better positioned to understand the unique risk profile of your business and to provide you with a more comprehensive policy. These insurers also have the experience and resources needed to provide you with a quick response if you experience a cyber breach.
Finding the right insurer for your business
When shopping for cybercrime insurance, there are a few factors you should consider. First, make sure the policy meets your business’s specific needs. Do you need coverage for just one breach, or for multiple breaches? Do you need coverage for cyber extortion, in which a hacker blackmails a company into paying them money? Do you need data recovery coverage? Beyond this, you should make sure that the insurer you choose has a strong financial rating. You want to make sure that your insurer can pay out if you suffer a breach. Lastly, you should make sure that the insurer has a track record of offering cybercrime policies to businesses in your industry. If a company is unfamiliar with the needs of your industry, it may be unable to respond quickly if you suffer a breach.
Summing Up
Cybercrime is a growing problem for businesses of all sizes. A single cyberattack can cost a company millions of dollars, and even the most cautious businesses can fall victim to hackers. This is why cybercrime insurance is so important. It protects businesses from the financial damage caused by cyberattacks, providing a lump-sum payout in the event of a breach. Make sure you get the right policy for your business by shopping around and asking plenty of questions.
