The Truth About CyberSecurity Insurance

Cyber and privacy insurance is a rapidly growing industry that’s expected to reach a market size of over $20 billion by 2025. Costs are going up and coverage for many business owners is going down. Here are the fundamental areas for which you need coverage.

The Definition of Cyber and Privacy Insurance:

The term “cyber and privacy insurance” is used to describe forms of coverage that can be used to protect against potential losses caused by an event such as a data breach or cybercrime.

1. Customer & Employee Data Loss
The first category of cyber and privacy insurance is customer and employee data loss. Many companies these days need to manage large amounts of sensitive information that is unfortunately also the target of many cybercrimes. There are many important areas of coverage related to customer and employee data loss, including:

-Identity recovery services
-Crisis management expenses
-Loss of income and wages
-Regulatory fines and penalties
-Forensic investigations

2.Business Interruption and Extortion

The second category is related to extortion attacks that have become a popular choice for criminals during the COVID-19 pandemic. These incidents include the use of ransomware that can disrupt business operations and lead to demands for substantial payments in order to regain access to the company’s systems and data. Coverage related to these extortion-style attacks provides support for:

-Ransom payments
-Data recreation and restoration
-Business contingencies and loss
-System failure recovery
-Forensic accounting services

3. Payment Fraud
Another category of cybercrime is payment fraud. These criminals use a variety of tactics to trick employees into sharing sensitive information or sending money directly to fraudulent accounts. This can also involve direct hacks into a system’s infrastructure for the purpose of stealing funds or installing malware. The first-party coverage related to payment fraud includes support for expenses related to three major events: telecommunications fraud, computer fraud, and misdirected payment fraud. Recovery of lost funds and assistance with managing telecommunications providers are two major benefits of this cyber insurance policy category.

A cyber and privacy insurance policy can also provide support for public relations expenses that may be needed to contact affected individuals and manage media coverage to preserve or restore the company’s reputation.

Cyber and privacy insurance will only continue to evolve as technology and strategies improve to meet market needs. Understanding these four major areas of cyber insurance coverage can help you compare coverage among providers when pursuing a policy. There are several factors to consider when implementing a cybersecurity program, and cyber insurance remains an excellent resource for reducing risk and mitigating against potential cyberattacks and data breaches.