The Power of Cyber Insurance

Cyber insurance is basically designed to provide comprehensive coverage against the financial and operational impacts of mounting cyber threats. While every organization’s risk profile is unique, most companies could benefit from purchasing a cyber insurance policy.
Cyber Insurance

In our digital era administrated by Information Technology (IT) and interconnected computer systems, the importance of safeguarding digital assets cannot be overstated. While cyber threats continue to evolve in sophistication and frequency, businesses are facing unprecedented challenges in securing sensitive information and maintaining operational continuity. This is where cyber insurance emerges as a beacon of protection.

What Is Cyber Insurance?

Cyber insurance, also known as cyber liability insurance, is a specialty insurance product intended to protect businesses from the financial fallout of Internet-based risks, and more generally from risks relating to Information Technology (IT) infrastructure and activities. Hazards of this nature are typically excluded from traditional commercial general liability policies or at least are not specifically defined in traditional insurance products. Insurance for cybersecurity typically includes first-party coverage of losses incurred through data destruction, hacking, data extortion, and data theft. Cyber insurance policies may also provide coverage for legal expenses and connected costs and vary by providers and plans

Who Needs Cyber Insurance?

While every organization’s risk profile is unique, most companies could benefit from purchasing a cyber insurance policy. A wide range of industries that are good candidates for cyber insurance include the following:

  • Businesses of all sizes: organizations that create, store and manage electronic data online, such as customer service contact centres, customer sales centres, PII and credit card numbers, could benefit from cyber insurance. In addition, e-commerce businesses can also benefit from cyber insurance because downtime related to cyber incidents can cause a loss in sales and customers. Similarly, any business that stores customer information on a website can benefit from the liability coverage provided by cyber insurance policies.
  • Healthcare providers: due to the sensitive information and patient data they collect, store and maintain, healthcare companies are frequently targeted with data breaches and cyberthreats. According to a data breach report by IBM, the average cost of a healthcare breach is $10 million annually. To reduce the financial and legal risks connected to data breaches and Health Insurance Portability and Accountability Act of 1996 (HIPAA) violations, cyber insurance is essential for healthcare organizations.
  • Financial institutions: banks and credit unions are also prime targets for cybercriminals due to their sensitive nature of dealing with customers’ personal information such as social security numbers. Therefore, cyber insurance can help these institutions recover from financial damages caused by cyberattacks.
  • Government agencies: a huge amount of private and sensitive information is handled by government agencies on many different levels. Cyber insurance can help government institutions guard against cyberattacks and ensure the stability of public services.
  • Educational institutions: establishments of learning such as schools, colleges and universities typically store large amounts of personal and academic records for both employees and students, and they are therefore good candidates for cyber insurance.
  • Companies with high revenue: due to the potential financial rewards, companies with significant revenue streams can be great targets for computer hackers. To guard against the financial damages brought on by cyberattacks and data breaches, organizations with substantial revenue should consider purchasing cyber insurance.

Read our article published on IN-SEC-M.

 

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