The Need for Cyber Insurance in Business

Cyber insurance may sound like something out of a science fiction novel, but it’s on the rise, and is now considered a necessity in some circles. All it takes is a simple look back at data breaches in recent years such as Target to see why. Here are a few things to consider if you’re thinking about investing in cyber insurance.

 Cyber Attacks Are on the Rise

 Cyber attacks against corporate entities and governments continue to come in waves, seeming to only increase as hackers become more clever in their tactics. A recent attack perpetrated in June 2017 affected entities worldwide, including the United States, India, Russia, and Ukraine. In Ukraine and Russia alone, it was estimated that over 80 companies were impacted by the attack. These increased risks have left many corporations vulnerable, but more importantly liable, to losing customer information.

 It’s standard practice today for companies of all stripes to collect user data, whether it’s email addresses, mailing address, or social security numbers. Although permission is granted by the user, as the law requires, that doesn’t mean that it’s automatically safe from nefarious malware and hackers. The atmosphere of increasingly worse risks has been described by experts as the new normal, and companies need to protect themselves. This is where cyber insurance comes in.

 More Common Among Businesses

 Businesses are battening down the hatches and taking action to protect themselves from cyber liability. More than 130 insurance providers wrote cyber insurance policies in 2016, with a total of $1.35 billion in direct insurance premiums. This represented a 35 percent increase from the previous year. In short, cyber attacks are a huge problem, and it’s getting worse as the Internet continues to grow and become more sophisticated. Data is a currency unto itself these days, and with the amount of transactions and exchange of information that transpires on the Internet, it’s a veritable goldmine for hackers.

 What It Covers and Who Needs It

 Cyber insurance can cover a variety of different things depending on the policy. Like any other premium, it’s necessary to read the fine print carefully and understand what you’re really getting. For example, some insurers will allow retroactive coverage since it can take 256 days to identify a cyber attack. The bottom line is that cyber insurance is now tailored to clients, rather than blanket packages. Another type of liability that’s addressed isn’t just protection from hackers, but the possibility of a disgruntled ex-employee stealing data or any other type of breach that can occur. This can all be combatted with cyber insurance policies.

 Protecting data you collect from theft is absolutely essential. In recent years, there have been plenty of horror stories about companies that left gaps in their data management and fell victim to hackers. This is not only expensive and bad for business, but it immediately results in a dramatic drop in customer trust. The last thing you want is data breaches to eat into your real life profit margins. This is especially true if you’re an eCommerce business that deals exclusively in online transactions. For many, cyber insurance is as necessary as any other type of protection from liability.