• Home
  • cyber security insurance

The internet penetration has increased in the world that all the media and banking transactions are digitalized. We are unknowingly exposed to various cyber-attacks in these digital transactions. The cyber attacks range from misuse of your financial information to data theft, cyber stalking etc.

Cybersecurity insurance has been a concern for the industry and the government as far back as the 1990s. At that time, one of the biggest threats was intellectual theft and copyright infringement. Some of the big players in the computer industry were worried about other rivals stealing their innovations and presenting them as their own.

Eventually, this led to the modification of the original policies so that they included both the first and third-party elements. Some of the costs that are still covered today include:

  • Business Interruption
  • Penalties and Fines
  • Costs of Monitoring Credit
  • Costs Related to Public Relations
  • Costs associated with Rebuilding or Restoring Private Data

Some of the key issues for the industry as it reconfigures its services include the following:

  • There is a wide diversity of users. Some of them are high-risk. Others are low-risk. But, all are competing for a few products within a small market.
  • The adverse risk selection process keeps out those that need and want the insurance most out of the market because the insurer cannot take on the risk that they are assigned.
  • High-loss probabilities result from the inadvertent actions or omissions of the client including not having the right protective infrastructure in the first place.
  • There is a lack of positive externalities. The industry is not developed enough to attract other partners to ensure that the service user gets a comprehensive package of support.

The main reason for purchasing this type of product is the fact that the risks it tries to cover are real, and they are happening in the real world today. Cyber attacks are on the rise in terms of their number and level of sophistication. Likewise, the potential and actual impacts of these attacks are making companies think again about the wisdom of not having comprehensive cybersecurity insurance. Another potential problem is that the nature of risk for online businesses is continuously changing. That means that those that are already uninsured are likely to face even more problems in the future. Those that have inadequate coverage will also be in a similar boat.

  • Protect against data loss due to hackers and other criminal elements.
  • Protect customers and suppliers so that they are not inconvenienced by major incidents.
  • Give investors and funders some confidence that the company is not going to collapse the moment there is a successful claim.
  • Ensure that the company is getting in line with all the regulations and requirements of the state within which they operate.
  • Provide an example of best practice to subsidiaries and parent companies that are not already insured.
  • Take care of unexpected and unexplained changes in the nature of the threat that is faced by all those who use the internet.
  • Deal with the public relations requirements following an incident that concerns internet breaches.
  • Have a fund or pot of money to deal with the legal and technical costs of dealing with major incidents.
  • Deal with issues of privacy and data protection following the online theft of private information.
  • Gain other benefits that arise from having an insurance policy including education and sensitization to risks.