Traditional insurance companies fight against physical types of risks and threats that we face in our day to day life. However, our world has digitized to a great extent in the past few years that has made us exposed even to nonphysical types of risks that come from the World Wide Web. These issues include cyber terrorism, hacking and electronic fraud as well as theft of the data. This is where Cyber Insurance comes into the force. Earlier when people were hardly aware of Cyber Insurance.
Why Cyber Insurance?
However, use of Cyber Insurance has been on the rise since the last few years. Viruses and unauthorized access to information are still responsible for the majority of the losses that a business faces. It was concluded through studies that many companies identify some type of breach in the cyber security and this leads to annual losses culminating in a huge amount. Cyber Insurance helps in effective management of the risks that posed by network and information security. It works by transferring of financial risk posed by network and computer incidents to the third party.
What does Cyber Insurance cover?
Now the question would be what kind of threats do Cyber Insurance cover? The answer to this is simple. Any data theft, alteration, or destruction through viruses or fraud, business interruption, extortion or hacking and infringement of intellectual property such as patent, trademark or copyright can be included in Cyber Insurance. Besides, it also includes the claims from a third party that are caused from denial-of-service (DOS) attacks. These attacks usually bring down eCommerce websites.
Similar to brick and mortar insurance companies seen in the real world, Cyber Insurance companies provide insurance and risk management services against several types of risks associated with usage of Internet. The amount of coverage is decided upon several factors like Size of the insured organization Amount of sensitive data stored, Industry, level of possible reputational risk, Organizational resiliency, and Threat vectors.
You may avail Cyber Insurance policies by companies like Lloyd’s e-comprehensive, Chubb’s cyber security, and AIG’s Net Advantage Security. These policies can be used to cover business interruption, damage of electronic data, professional errors, network security liability, downstream network liability and hacking, as mentioned earlier. Some insurance companies also provide risk management services that include online as well as offline security evaluation. A reliable market for Cyber Insurance ensures numerous benefits for the company and society too.
Conventional insurance policies seen in brick and mortar setups have changed and improved with time and has taken years of speculation and research. Insurance and risk mitigation are backed by all these efforts.
On the contrary, Cyber Insurance is a new concept. Because of lack of estimation of data on cyber risk, Cyber Insurance policies need high premiums. Also, the deductibles are high with these policies. If the size of the company and the coverage required is huge, the premiums can cost an exorbitant amount. Insurance companies can offer security investment by lowering premiums for less risky factors. Cyber Insurance can thus go a long way in helping firms to smoothen financial outcomes. They do so by accepting the small fixed present cost of an insurance premium that replaces future uncertainty of large losses. Every organization should make their digital content secure with the help of Cyber Insurance in the present times. It is so much better to spend a few dollars on Cyber Insurance rather than showing excuse over the loss due to overconfidence and neglect.
Customers should understand that Cyber Insurance takes more money than the conventional insurance cost for many reasons. First and foremost, customers usually overlook cyber threats. Next, the villains of digital markets try their best to develop new viruses and malware that warrant the use of Cyber Insurance. Another important point to remember is that insurance companies do not have handy tables that can be used for companies. It is more advisable to go to an experienced and capable insurer rather than settling for the cheapest cyber insurer.
Role of Insurance Company:
If the details of the process are considered, each and every insurance company will start with a simple survey kind of a thing. Only after this formality is dealt with, the insurance company quotes their policy in front of the customer. The risk analysis department is provided with the completed survey for reviewing it. Once this is done, they offer a solution that can be used by the insurance agent to quote a price for the policy, according to the existing security model that the customer currently has. If the solution is simple to execute, the cost of insurance premiums is considerably low.
Cyber Insurance policies also include certain prerequisites. The insurer evaluates the computer network security of the company. If this is found to be incompetent, the policy can be denied. This implies that it is mandatory to meet or outweigh the recommended security features put forth by the insurer. It can be quite daunting for an insurance firm to provide a Cyber Insurance package by accurately determining the cost of investment for a specific policy and calculating the cost of loss.
Looking at the huge magnitude of financial loss associated with the breach of online security and the scope of such factors in robbing digital content, Cyber Insurance is must. This can significantly lower down your company’s overall exposure to liability. Protection of company data and intellectual property remains the primary aim of Cyber Insurance. The world of the Internet is more like a slippery floor. No matter how carefully you walk, you can slip and fall. Cyber Insurance makes sure that you get up safe and sound even if you fall.
Despite the few shortcomings associated with Cyber Insurance, it is the ultimate treatment of cyber risk. You can get away from hacker break-ins, shutting down of the servers all of the sudden and internal sabotage if you use Cyber Insurance wisely. It can certainly be a part of long-term solution to improve cyber security. On the whole, the day is not far away when Cyber Insurance would be the easiest and most viable way to manage cyber risks. To conclude, we would like to emphasize on the fact that it is more prudent to invest some dollars in Cyber Insurance instead of facing such a major financial setback that you have to close down the company doors forever.