What is Cyber Insurance? Do you Need Cyber Insurance?

What is Cyber Insurance? Do you Need Cyber Insurance?

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What is cyber insurance

We, humans, tend to live in great apprehension. Our lives revolve around ‘What If?’ and that leads us to adopt risk management strategies for an unforeseen loss. Life insurance. Check. Health Insurance. Check. Car Insurance. Check. Home Insurance. Done. Cyber Insurance. What is cyber insurance? Since we tend to insure almost every asset that we own, why not our cyber safety? Is there really a need for cyber insurance? How much does cyber insurance cost? Get the answers in the ensuing sections.

What is Cyber Insurance?

Insurance is nothing but a risk management strategy to protect against uncertain losses. Join the dots to cyber security and you will arrive at the answer to what is cyber insurance? This form of insurance helps alleviate the losses incurred due to cyber security breaches such as identity theft, online frauds, ransomware blackmail demands, data recovery etc.

Though the cyber insurance market is still blossoming, it is slowly becoming popular with CSOs. It provides reasonable protection against financial losses incurred due to the different cyber attacks one is vulnerable to.

What Does Cyber Insurance Cover?

The volume of personal data generated, transmitted, and stored on various electronic devices and platforms is growing exponentially. Therefore, the risks and instances if cyber attacks are also on the rise.

Following are some cases that illustrate why you need cyber insurance?

  • Ransomware Attack

A ransomware attack results in the encryption of all your files until the victim pays a ransom to unlock them. A personal cyber insurance policy shall cover such attacks.

  • Smart Home Hacking

What happens when a hacker takes control of a smart home or any of its smart digital components? Cyber insurance covers the damages resulting from a smart home hack.

  • Data Recovery

Say you lose the files on your system to a malware attack and make a hefty payment for data recovery? Having cyber insurance covers such expenses.

  • Health Fraud

Such insurances also cover losses suffered when a conman uses stolen social security numbers or personal data for medical expenses.

  • Business Interruption

This covers the losses in income when hacking, malware, DDoS or other such cyber attacks disrupt a business.

  • Virus Transmission

Say you incur damages due to the failure in stopping the spread of virus, Trojans or other malicious content. It comes under cyber insurance coverage.

  • Computer Fraud

It provides protection against the loss of money, securities and other assets due to social engineering and cyber frauds.

One can purchase a cyber liability coverage as a standalone policy, or as add-ons to general liability or business owner’s policy. Cyber liability coverage can be purchased as a standalone policy, or as add-ons to general liability or business owner’s policy.

Cyber Insurance Cost

Like all other insurances, the cost of a cyber insurance policy also depends upon the nature of the coverage. Sadly, policymakers are still struggling to frame a suitable model to predict online risks and attach a befitting financial value to it. Insurance companies are still on the learning curve of understanding and identifying cyber assets and how best to cover them.

On average, annual premiums for small and mid-sized enterprises vary from $1000 to $1 million.

Firms such as Hartford Steam Boiler and PolicyBee offer policies starting as low as $30 and $9 a year. Even though the initial cost may seem low, the policy fee escalates as one opts for wider coverage such as legal fees, data recovery services, hardware repair, and ransomware extortion payments.

Factors Affecting Cyber Insurance Cost

The cyber insurance framework is little trickier than other forms of insurance. It is more complicated as the landscape changes every 12 months as a result of technology, legislation and coverage practices.

There are several factors influencing cyber insurance cost and yearly premium.

Type of Industry

Industries dealing with massive personally identifiable information (PII) or personal health information (PHI) face greater risks of cyber attacks. This includes the finance and health industries where the risk of financial loss due to cybercrimes is relatively higher. Furthermore, Information Technology (IT) enterprises that provide data security services also require greater liability protection.

Annual Revenue

Businesses generating higher revenues are more vulnerable to cyber attacks than those with lower annual revenues.

Nature of Data Stored

You need greater protection when you deal with more client information than personal information. Dealing with more PHI or PII translates to greater risks, hence a greater coverage.

Need for Cyber Insurance

According to Indian Computer Emergency Response Team (CERT-In), about 44,679, 49,455, 50,362 and 53,081 cyber-attacks occurred in the years 2014, 2015, 2016 and 2017. The National Crime Records Bureau (NCRB) registered over 9,622, 11,592, and 12,317 cybercrime cases in 2014, 2015, and 2016, respectively.

Cyber attacks are unforeseen and can have devastating effects on one’s business or personal life. Therefore, it is essential to have some sort of security against losses resulting from cyber attacks/. Cyber insurance provides this security.

So, do you need cyber insurance?

Well, the answer lies in the net worth of your business or your own self. The higher the net worth, the higher are the chances of a cyber attack. Therefore, an extensive cyber insurance policy is beneficial for such families or businesses.

Where to Get Cyber Insurance From?

So you made up your mind to get yourself or your business cyber insurance policy. The next question that arises is where to get it from?

One can obtain a cyber insurance policy either from an insurance broker or insurance agent. Whereas agents usually represent a single agency, brokers represent multiple agencies and hence boast of broader knowledge.

1. Insurance Agents

If you choose to get cyber insurance through an agent, it means you are dealing with a single insurance company. You can choose from two types of insurance agents – captive and independent. Captive agents offer products only from the company they represent. Conversely, independent agents represent multiple insurance companies. Getting quotations from at least three different insurers shall give you a better idea of the pricing and coverage.

2. Insurance Brokers

Just like any other broker, insurance brokers act as a medium and can get you quotes from multiple companies. In other words, the broker is scanning the market for you to get you the best coverage at the optimal cost and from the best agencies. Choose a broker having the experience of working with various insurance companies and with profound knowledge regarding your industry.

To sum it up, choose a reputed insurance provider that has extensive knowledge of the cyber insurance market. You should be able to bank on them for choosing proactive protection plans. Also, do a comparative analysis and choose an agent who offers a free quote.

Cyber Insurance Landscape in India

Did you know that India is the second largest online market in the world? Experts project the number of internet users in India to reach 511.89 million by 2022. Majority of internet users in India use mobiles that offer a cheaper alternative to desktops, laptops and their associated infrastructure. While the internet has created greater opportunities, it has also unleashed bigger threats in terms of online frauds and attacks

With the colossal amount of personal and financial data exchanged each day, misuse of data is inevitable. As a result, companies providing insurance against cyber risks such as phishing, email spoofing, identity theft, cyber bullying etc. are growing.

In India, Bajaj Allianz General Insurance was the first to introduce cyber insurance policies for individuals. At present, HDFC ERGO also provides cyber security coverage. Cyber insurance premiums in India are still affordable as compared to other nations, starting as low as ₹1,000.

Combating Cybercrimes with Incognito Forensic Foundation (IFF Lab)

Incognito Forensic Foundation (IFF Lab) is no provider of cyber security insurance but offers consultation on cyber security measures. IFF Lab is a private forensic lab in Bangalore with a state-of-the-art digital forensics installation. It provides assistance to law enforcement agencies on the investigation of computer-based crimes, data recovery, mobile forensics and other aspects of digital forensics.

Contact IFF Lab for Cybersecurity Assistance and Consultation.