Cyber Insurance: A Smart Investment to Protect Your Business from Cyber Threats in 2023
Don’t wait until it’s too late – get cyber insurance today and secure your business for tomorrow.
By Zia Muhammad, Cyber Risk Advisor, Onpoint Insurance Services
In the current era of technological advancements, businesses are increasingly reliant on technology that opens up a new world of increasing volume and sophistication of cyber threats. Cyberattacks severely impact businesses and cause significant financial losses, damage to their reputation, and compromise sensitive data. Therefore, it is crucial for businesses to prepare for the inevitability of cyber-attacks, mitigate risks, and secure their infrastructure. This can be done by implementing proactive defensive security controls and implementing cyber insurance to have your back in case something goes wrong. This article covers Cyber Insurance and Why it Can Be a Smart Investment for Your Business.
What is Cyber Insurance?
According to the U.S. Federal Trade Commission (FTC), cyber insurance is a particular type of insurance that helps businesses mitigate financial losses resulting from cyberattacks. Consider it as a contract between the insured business and the insurer company where the insured is obligated to pay a premium, and the Insurer is obligated to provide coverage for various aspects of cyber attacks, such as data breaches, ransomware, network interruption, cyber extortion, identity theft, and other cyber threats.
Cyber insurance covers the damage that a business suffers because of a cyberattack. The coverage usually covers the costs for breach recovery, notification costs, business interruption costs, ransom costs, investigative services, data recovery, and legal fees, among others. As per U.S. Government Accountability Office (GAO) guidelines, every business that handles customer data or stores information online should consider cyber insurance.
Scope and Coverages Offered in the Cyber Insurance Market
The cyber insurance market has experienced significant growth in recent years, with premiums reaching $10 billion in 2021. However, the market still faces challenges in accurately assessing and pricing cyber risk. Therefore, it’s really important to note that the scope and coverage offered in the cyber insurance market are constantly evolving to keep up with the changing landscape of cyber threats. On a broader level, cyber insurance can be divided into two major categories: first-party coverages and third-party coverages.
First-party coverage protects the insured business data and resources, including employee and customer information. This coverage primarily covers incidents that directly impact your business and underlined operations. For example, business interruption costs, legal counsel, regulatory obligations, recovery and replacement of lost or stolen data, customer notification, lost income, crisis management, public relations, cyber extortion, forensic services to investigate the breach, and penalties related to the cyber incident, among others.
On the other hand, third-party cyber coverage usually protects businesses from legal liability if a third party brings claims. This coverage typically includes payments to consumers affected by the breach, claims, and settlement expenses relating to disputes or lawsuits, losses related to defamation and copyright or trademark infringement, and costs of responding to regulatory inquiries, among others. These coverages are not universally standard or consistently adopted by all providers. Instead, these are general categorizations that average out the offerings of major providers. The underlined breakdown information is here to provide you with an overview and a broader level of knowledge and does not explicitly feature any carrier or insurance provider.
Recommendations for businesses
The convergence of cyber insurance is creating opportunities for organizations to make smarter investments. Historically, cyber insurance focused on financial protection while cybersecurity focused on data protection. However, the two are now merging as cyber insurers have started incorporating data-driven risk assessments and requirements into their policies. This has led to a closer alignment between cybersecurity teams and insurance buyers, resulting in improved cyber resilience. Organizations that invest in cybersecurity not only protect themselves but also receive better rates and terms upon policy renewal. Insurers are also offering more sophisticated services and partnerships to help policyholders achieve compliance and best practices. Despite challenges in obtaining and renewing policies, the convergence of cybersecurity and cyber insurance offers a win-win situation for organizations and their security staff.
Cyber insurance should not be viewed as the first line of defense but instead as a component of a broader risk management strategy that includes identifying, defending, and residue risk transfer. The first step should be to access the current state of security of your organization. For instance, The Federal Financial Institutions Examination Council (FFIEC) developed the Cybersecurity Assessment Tool (CAT) to help financial institutions, banks, and credit unions identify cybersecurity risks and determine their preparedness. The CAT is also useful for non-depository institutions and other small companies. The second step should be to implement defensive measures, such as installing antivirus software, updating systems and applications, encrypting data, using strong passwords, and educating employees on cybersecurity best practices. Finally, the third step should be to buy cyber insurance that can cover the costs and damages of cyber incidents that may still occur despite your best efforts.
Choosing the Right Cyber Insurance Policy
Cyber insurance is essential for businesses to cover the costs and damages of cyber incidents, but it is not easy to obtain. Different policies have different terms and conditions, such as coverages, exclusions, limits, deductibles, and premiums. These can make buying cyber insurance a complex and challenging process. When choosing a policy, it is important to review existing business policies, understand the volume of sensitive data, reduce risk where possible, and carefully read the policy to ensure adequate coverage. That is why you need a cyber expert on your side while buying cyber insurance.
A cyber expert can help you understand the contract language, compare different policies and options, and choose optimal coverage tailored to your needs. You don’t want to end up with an insurance agent who only cares about lowering the budget and selling you a cheap insurance policy that you keep paying for, but when there is a cyberattack, the insurance proves useless due to policy exclusion or other conditions that you or your agent were not aware of. You want to buy cyber insurance that gives you the best value for your money and the best protection for your business.
That is why you should trust OnPoint Insurance Services, a trusted and reputable consultation company that provides outstanding service and has a team of experienced insurance professionals. OnPoint Insurance Group is an independent agency that works with over 150 insurance companies to provide customized and affordable solutions for first-party cyber insurance and cyber liability insurance. Its mission is to deliver quality and honesty to its customers and to help them protect their assets. OnPoint Insurance Group also offers 24/7 service, online quotes, and easy switching options for its customers. For your free business evaluation and quotes, visit their website and get a free quote today.
Ending Remarks
Cyber insurance is not a luxury, but a necessity for any business that relies on technology. Cyber threats are constantly evolving and becoming more sophisticated, posing serious risks to your data, reputation, and bottom line. By investing in cyber insurance, you can protect your business from the financial and legal consequences of a cyberattack, and gain access to valuable resources and support to help you recover and resume your operations. Cyber insurance is a smart investment that can give you peace of mind and a competitive edge in the digital age. To find the best cyber insurance policy for your business, compare online quotes from different insurers with OnPoint Insurance Services and choose the one that meets your specific needs and budget. Don’t wait until it’s too late – get cyber insurance today and secure your business for tomorrow.
About the Author
Zia Muhammad is a Cyber Risk Advisor at OnPoint Insurance Services. He has a master’s and a Ph.D. in cybersecurity. He helps clients assess and manage their cyber risks through cyber insurance. He advises them on how to select the best insurance coverage for their needs, compare different policies, and negotiate favorable terms. He also ensures that their insurance program aligns with their risk profile and business goals. His goal is to help clients make smart decisions and optimize their risk strategies in the face of evolving cyber threats. Zia can be reached online at (zia@onpointins.com, and on LinkedIn) and at our company website https://onpointins.com/
