Insurance has existed for almost as long as businesses have. Since its inception, the basic aim of insurance has remained the same – to protect against risk. However, the form of these risks have changed over the years. As the business landscape has grown and diversified, the risks and potential threats an organisation faces in its day-to-day have also increased.
In the world we find ourselves living in today, with businesses having to rely entirely on digital solutions to work remotely, cyber crimes are at the forefront of peoples’ consciousnesses – and with good reason. Digital threats are becoming more and more dangerous, and it’s in every businesses’ best interest to make sure they’re covered.
Also known as Cyber Liability, or simply Cyber Insurance, Cyber Security Insurance is designed to protect businesses from the impact of cyber threats. Any business that uses the internet or records and stores pertinent customer and company data on IT systems needs to have cyber security insurance in place to protect themselves from the financial implications of a data breach.
A 2019 Accenture report found that the frequency of cyber breaches have increased by 67% since 2014. Also factoring in the possibility of accidental loss and corruption, and it’s now become a case of when, not if, a data breach will occur. Security systems have improved for this reason, but should the worst happen, a data leak can be incredibly costly.
Of course, the details of your insurance cover will vary depending on who your provider is, but in most cases cyber insurance will cover the costs related to data leaks, thefts, losses, destruction or corruption – accidental or otherwise. Certain policies will also cover such things as system damage, business interruption resulting from any cyber incidents as well as covering the cost of the cyber incident response.
Ultimately, this type of insurance evolved (and is still evolving) as businesses have started to focus more closely on the digital arena. The more reliant organisations are on IT systems to run their core functions, the more important it becomes to protect them.
As mentioned, cyber security is still a relatively new area of concern for businesses. The popularisation of computers and the rise of the internet in the last twenty years or so has led to the need for cyber security insurance. Early forms of cyber insurance was designed to focus mainly on hacking threats to online content and software. This may have been revolutionary for the time, but the years have seen businesses and insurance grow increasingly complex.
A spate of high-profile cyber incidents within the last decade opened up many organisations’ eyes to the weaknesses in their data and cyber security protocols, and has led to the spotlight increasingly being shone on all things related to cyber security.
We only need to take a look at the figures to see just why Cyber Insurance has become integral for modern businesses. According to Carbon Black, 88% of UK companies reported a data breach of some kind in the past 12 months. In fact, every day in the UK, there are over 60,000 attempts to hack into SMBs. Ultimately, the overall price of a cyber incident can be crippling, costing an average of $3.88 million per breach. With this in mind it’s easy to see how cyber security insurance has risen in importance to help cover the financial burden of a data breach.
This is why cyber insurance has grown at the rate it has.
All of this aside, a business’ foray into Cyber Insurance can often be marred by confusion. Ultimately, cyber insurance is still in its early stages, and compared to more established fields of insurance, it can be difficult to know the right cover for your business. One of the main reasons for this is because cyber insurance has yet to develop a universal standard. Consequently, you see noticeable differences between providers in the terminology they use as well as what they do and do not cover – the unfortunate by-product of which is an increasing number of companies who end up splashing out on high premiums for a policy that doesn’t suit their requirements.
To put it bluntly, finding the ‘right’ cover for your business can be tricky, but this shouldn’t be a reason to not do it. The best advice is to find a provider that offers everything that your business deems important, and not to plump for a one-size-fits all policy.
With the confusion surrounding cyber insurance cover, more often than not businesses choose to enlist the help of a broker to find the best policy for them. A broker’s job is to act as a go between for insurers and customers, helping to find the best insurance solution possible.
Good brokers will assist in several areas, from highlighting the cover plans that are best suited to specific industries, to checking the terms of cover doesn’t leave out any glaring details. In some cases, brokers will sit down with clients to build out a tailored insurance plan that is unique to the business in question. For something like cyber security insurance, where there are so many variations available across different providers, having a broker on hand is one of the most effective ways to ensure you end up with the best solution in place.
The world of cyber threats and cyber security is ever-changing. As the risk of cyber incidents continue to grow, it’s clear that the importance of cyber security insurance will continue to grow alongside it. Likewise, as the field of cyber insurance becomes more established you’ll find new developments in terms of what and what isn’t included under the policies. For now, however, it’s important for businesses not to skimp on the details when it comes to buying the right cyber insurance policy.