Today’s organizations have a long road of cyber threats to look forward to—at least that is the lesson of the last two decades. The faster the “good guys” create technology to detect and prevent cyber breaches, the faster the “bad guys” invent ways to skirt them and open new holes to do their dirty work. While your organization may already have a strong security practice in place, you need to consider cybersecurity protection in the form of insurance—especially if you are in an industry like healthcare or finance.
According to the National Association of Insurance Commissioners, data breaches in 2021 outpaced those in 2020—increasing by 68%. And “breaches involving personally identifiable information (PII), like Social Security numbers (SSNs), increased slightly from 80% to 83% in 2021,” according to the Identity Theft Resource Center. The continual uptick in cybersecurity incidents means businesses face more intense underwriting processes for insurance. To wrap your mind around cyber insurance and what it means for your business, keep reading.
What Is Cybersecurity Insurance?
Cybersecurity insurance is a way to protect your business against financial loss as a result of being affected by a cyberattack. It is one of many ways you can manage your risk profile, and it assumes—rightly—that there is no 100%, surefire way to make your organization immune to cyber threats. A zero-day vulnerability can be exploited at any time, and you could be the victim. Businesses thus opt for insurance to transfer the risk they would otherwise incur after a breach.
What’s Covered with Cybersecurity Insurance?
Data breaches are the most commonly covered threat in cyber insurance, however policies can cover many other attacks and outcomes from attacks, including:
Loss of business
Should you experience loss of income to your business as a result of experiencing a cyberattack, some of your expenses may be covered. You may have additional costs you incurred to investigate the attack, which may be covered, or perhaps the attack was not even directly on your business but that of a third party. Your policy may cover losses as a result of that vendor-related attack as well.
Ransomware
Cyber extortion has many forms—ransomware the most notorious. Insurance policies may cover these types of cyberattacks if your business has been threatened with having to pay a ransom to get access to your system or to prevent the disclosing of confidential information.
Corporate Identify Theft
This threat is the use of a corporate identity to commit fraud, and coverage may be available for it. It can include using your company’s identity to sign contracts, paying for merchandise or services through stolen account information or credit cards, and more.
Reputation Loss
One of the most destructive losses a business endures as a result of a cyberattack is that on its name. Losing customer trust can wreak long-term havoc on your organization, so cybersecurity insurance policies may cover some aspects of your damaged reputation such as lost income for a specific duration.
Is Cybersecurity Insurance Right for You?
It’s important to consider that cybersecurity insurance is not a panacea for preventing or recovering from cyberattacks. It is one of many tools in your security arsenal and should be thought of as prevention of greater loss or a fallback in case your other security measures fall through.
At Point Alliance, we help organizations provide insurance companies with the required security reports from Microsoft 365 that help validate the risk mitigation and security measures that have been put into place to prevent data loss.
Get in touch with Point Alliance today to learn more.
