Businesses of all sizes worldwide are facing a sharp rise in cyberattacks, from data breaches to ransomware attacks. As more and more businesses go completely digital, the risk of financial and reputational damage is getting higher than ever before. Sometimes, the financial loss from a cyber attack is somewhat unbearable for small and medium businesses.
This is where cyber insurance comes into play.
Similar to other types of insurance, Cyber insurance is designed to help businesses mitigate the financial loss after a cyber attack, which includes both cost recovery and legal battles. Small and medium-sized businesses are usually the target of digital thives as they lack cyber security.
What is Cyber Insurance?
Cyber insurance mitigates financial loss for businesses due to Cyber attacks. Since 2019, the number of Cyber attacks has shot up significantly, causing millions of dollars in damages to small and medium-sized businesses. Cyber insurance can mitigate legal fees, business interruptions, recovery, and crisis management. It can also help with cyber extortion payments and regulatory files.
What is the importance of Cyber Insurance?
Cyber insurance is playing a critical role in mitigating financial loss for businesses worldwide. It is a recommended service for businesses of all sizes. Let’s take a look at some of the advantages of having cyber insurance.
Financial Protection
Cyber attacks can cause anything from nothing to millions of dollars in regulatory penalties and invite lawsuits. Cyber insurance can help businesses cover a major chunk of financial loss due to Cyber attacks in terms of legal fees, data recovery, regulatory fines, etc.
Seamless Operations
Cyber insurance encourages businesses to adopt better cyber security measures that help them reduce the effects of an attack. Better cyber security measures also help them recover the data and provide seamless business operations without major downtime .
Regulatory Compliance
A business can face hefty government penalties after a cyber attack. Governments around the world are rapidly increasing data protection regulations, which can lead to heavy fines or penalties for non-compliance. Cyber insurance encourages businesses to follow all necessary data protection regulations and even covers expenses for legal complexities after the attack.
Peace of Mind
Similar to any other type of insurance, cyber insurance provides a piece of mind that allows business owners to focus more on the business. It is a vital part of business operations that provides a safety net for businesses to grow in peace.
Who should get Cyber Insurance?
Every business that uses the Internet to provide services should get cyber insurance. Whether you are a small business in a small town or a medium-sized to large Enterprise, you should get cyber insurance to protect your future and business.
A cyber attack doesn’t just steal data; it also impacts the business in numerous ways. It can cause operational downtime, data recovery costs, incident report and Management costs, ransom payments, legal penalties, and possible lawsuits. Cyber attacks can cost businesses $10.5 trillion annually by 2025.
Businesses that are not using the internet to provide services can avoid cyber insurance. You can avoid cyber insurance if you are not storing the credit card information or personal information of customers to operate.
How to choose the Right Cyber Insurance Policy?
The cyber insurance market is full of options, and choosing the right policy for your business is crucial to ensuring comprehensive protection against cyber attacks. We have developed a three-step formula that can help you choose your first or next cyber insurance policy.
Risk Assessment
First, you have to conduct a risk assessment to identify the maximum financial impact of a cyber attack on your business. Things like customer databases are a critical asset which can include the credit card details of your customers.
A successful cyber attack may attract hundreds of costs that may include attack management, data recovery, business interruption, cyber extortion, legal fees, and regulatory fines.
We recommend hiring a professional for optimal risk assessment. There are many things that can directly or indirectly impact the business.
Policy Selection
Policy selection is also an important part of your whole cyber security and cyber insurance strategy. There are hundreds of Cyber insurance providers worldwide offering thousands of different cyber insurances.
High coverage limits and reasonable deductibles are the thumb rule to select any cyber insurance. You can hire a professional who will help you select the cyber insurance policy based on their experience and your risk assessment.
Kindly focus on combining a good policy with a good policy provider. Try to find a good name in the industry with a proven track record of handling claims efficiently.
Annual Review
Lastly, review your cyber insurance policy every year to ensure complete coverage. This review will include an annual assessment of your risk and policy coverage. You might also have to adjust the coverage according to your updated risk assessment.
Who are the top cyber insurance providers?
There are hundreds of Cyber insurance providers worldwide. We have shared a list of the top cyber insurance providers in the US, Canada, and some other countries. All of these cyber insurance providers are known to deliver good insurance policies and customer service.
- Chubb
- AXA XL
- AIG (American International Group)
- Travelers
- Beazley
- Zurich (Canada)
- QBE Insurance (Australia)
- Hiscox (UK)
Conclusion
Cyber insurance has become a vital part of most businesses worldwide. It provides a safety net to businesses in the event of a cyber attack. Cyber insurance mitigates the out-of-pocket cost due to a cyber attack and provides peace of mind to business owners. You can choose a cyber insurance policy based on the risk assessment and policy provider.
Is cyber insurance necessary if my business already has a strong cybersecurity profile?
Cyber insurance is a recommended service even if your business already has a strong cybersecurity profile. New cyber threats are emerging everyday and sometimes penetrate even strong cybersecurity measures. Cyber insurance acts as an additional layer of defense in the strategy and provides financial support after incidents.
What is the cost of cyber insurance?
The cost of cyber insurance varies depending on the coverage, reputation of the provider, and add-ons. There are no fixed charges for cyber insurance, as companies usually offer tailored plans based on various factors.
