• With every business incorporating technology in its working, the need for cyber insurance has increased manifold, almost making it a necessity in this digital era.
The Trump administration recently executed the final step of its proposal for small business insurance policies. President Trump signed an executive order in October 2017 that included the draft for cheaper health insurance policies for small business and self-employed entrepreneurs. The law was developed with an aim to provide alternatives to the Affordable Care Act. According to the terms of the policy, small-scale business ventures can band together based on their location or the domain they operate in, to buy health insurance for the company. Labor secretary, Alexander Acosta, commented on these new association health plans saying that they are about more choice, more access, and more coverage. Something as important as insurance should be easy on all these factors:
- the choice to select an appropriate plan,
- the ease in claiming procedures and documentation, and finally,
- a coverage that offers financial back up for everything, major or minor, to an insurer.
Moreover, for businesses that are unpredictable when it comes to fiscal risks, insurance plays an important role in reinforcing the game plan and mitigating any losses that may occur within a typical business setup. The traditional insurance plans work well with traditional companies that restrict the use of technology for reaching out to their clients via monthly emails and newsletters. But, for a digital business that relies heavily on the World Wide Web, the current scenario necessitates the need for cyber insurance.
The long and short of cyber insurance
Conventional business insurance plans help a company with ‘normal’ issues occurring during the course of a business’s operation, which includes property damage, legal liability, and employee-related risks. Such coverage was good till our businesses operated within solid brick-and-stone walls with minimal technical involvement. The times, however, have changed. Today, the term ‘digital business’ is very common and the Internet plays host to several digital businesses established every day.
Cyber insurance is a part of the insurance family that specializes in the risks involved in dealing with the web on a daily basis. The World Wide Web sure is wide, but it’s also haunted by a lot of digital liabilities. For businesses established on the Internet, cyber insurance helps mitigate the damages caused due to Internet-based risks. These risks are usually not defined in conventional insurance policies for businesses and include risks like data loss or theft, hacking, denial-of-service attacks, and losses caused by the company to its customers. Thus, cyber insurance offers remedial services for and against cyber investigation, business loans, web privacy, digital lawsuits, and extortion.
Types of cyber insurance
Like conventional insurance, cyber insurance offers to safeguard digital businesses on various levels. Some of the common forms of cyber insurances we have today are:
Insurance is offered against cyber-attacks and hacking of computer systems, servers, and databases.
Theft and fraud
Insurance is offered against the theft of data over a network or to mitigate the losses caused by transactions over a fraudulent link.
Insurance is offered to cover any technical, legal, or forensic services required for investigating the causes and culprits behind a cyber-attack.
Insurance is offered in cases where a business owner is unable to conduct business due to a breach in the network or some other cyber disruption.
Insurance is offered to policyholders or business owners to cover any threats of a potential cyber-attack that might expose relevant sensitive information out in the open.
Insurance is offered against attacks that might defame a business organization.
Computer data loss and restoration
Insurance is offered against all forms of data loss, misplacing, retrieval, and reconstruction in case of a cyber-attack that affects either the hardware or software or both in a system.
The need for cyber insurance in a business
In 2011, Sony’s PlayStation experienced a hacker breach that cost the gaming tycoon a hard hit of $171 million. Analysts commented by saying that the company could have avoided such a fiscal debacle, had it opted for cyber insurance, which offers protection against such attacks, unlike the general liability insurance. The company not only faced a financial stump after the accident but also invited a certain level of mistrust from its customers.
Stephane Nappo, the Global Head Information Security for the Société Générale International Banking & Financial Services, says, “It takes 20 years to build a reputation and few minutes of (a) cyber-incident to ruin it.”
Any organization that stores company and customer databases online, employs data procured from online sources, engages in client and customer relationships via a digital link or relies on online payment portals for monetary transactions is at the risk of experiencing a cyber-attack and should consider cyber insurance to build a protective mechanism against the fickle network that the World Wide Web is.
Large-sized organizations employ teams entirely meant for computer network and security handling. Small businesses, on the other hand, live under the impression that they are nested in the blind spots of the Internet. This is, however, not true. All kinds of businesses face an increasing threat of a cyberattack today. A Symantec Intelligence Report claims that over 30% of the phishing attacks are launched at organizations with less than 250 employees. Furthermore, nearly 43% of the cyber-attacks are targeted at small-sized organizations. For large-sized organizations, these statistics report significant losses to the companies experiencing a cyber-attack. The Centre for Strategic and International Studies approximated the annual loss to the global economy to be in the rage of $375 to $575 billion solely due to cybercrime attacks.
Considering all these factors, a business that dips its feet in technological applications has to have cyber insurance. As mentioned above, the insurance policy works, keeping in mind the various forms of cyberattacks and can be customized as per an organization’s needs. To sum it up, cyber insurance helps a company not only with the mitigation of cybercrimes, but also minimizes the undue expenditure that comes with business process interruption, security overhauls, and customer concessions.
Cyber insurance is the need of the hour for any business today. With all businesses deploying websites, mobile applications, and online convenience services for its clients and customers, they leave a digital footprint with every activity they carry out on this invisible network. General liability insurance doesn’t pay much attention to your web-based cloud servers that hold valuable data. It is here that cyber insurance comes into the picture. Cyber insurance policies overcome the lag in modern insurance coverage needs, and offsets all kinds of cybercrime activities, along with providing the resources for minimizing a security breach to ensure optimum success of your digital business.