Cyberattacks can ruin your business. Learn how to protect it with cyber insurance, its types, benefits, and risks, as well as the tips for choosing the right policy.
Cyberattacks are one of the most biggest threats that businesses face today.
They can cause not only financial losses, but also reputational damage, legal liabilities, and operational disruptions.
That’s why more and more businesses are turning to cyber insurance, to help them mitigate the risk of cybercrime.
Cyber insurance covers the losses a business may suffer as a result of a cyberattack, such as data recovery, legal fees, and customer compensation.
It also provides access to expert services and resources to help businesses prevent, respond to, and recover from cyber incidents.
In this blog post, we will take you through how cyber insurance works, the benefits and risks of having cyber insurance, and how you can choose the right policy for your business,
We will also share some of the latest trends and developments in the cyber insurance industry, as well as some case studies and examples of cyber insurance in action.
Let’s begin!
Types of Cyber Insurance Coverage
Cyber insurance is not a one-size-fits-all solution. Different businesses have different needs and exposures, depending on their size, industry, and operations.
Therefore, cyber insurance policies can vary in terms of the types and extent of coverage they offer.
However, some of the most common types of cyber insurance coverage are:
1. Privacy Liability Coverage:
This covers the liability that arises from the unauthorized access, use, or disclosure of personal or confidential information, such as customer data, employee records, or trade secrets.
It also covers the costs of notifying the affected parties, providing credit monitoring services, and complying with regulatory requirements.
2. Network Security:
This type of cyber insurance covers the expenses resulting from a breach of network security, such as a denial-of-service attack, a ransomware attack, or a malware infection.
It also covers the costs of restoring or replacing the damaged systems and data, as well as the lost income due to business interruption.
3. Network Business Interruption:
This covers the loss of income and extra expenses incurred due to a disruption of network services caused by a cyberattack or a system failure.
It also covers the costs of mitigating the impact of the interruption, such as hiring temporary staff, renting alternative equipment, or relocating operations.
4. Errors and Omissions Liability:
This covers the damages arising from the failure to provide adequate professional services, such as software development, IT consulting, or data analysis.
It also covers the costs of defending against claims, settling disputes, and correcting errors.
5. Media Liability:
This also covers the liability resulting from the infringement of intellectual property rights, such as trademarks, copyrights, or patents, or the violation of privacy rights, such as defamation, libel, or slander, in the course of online or offline media activities, such as advertising, publishing, or broadcasting.
Benefits of Cyber Insurance
Cyber insurance provides many benefits for businesses, especially during a cyberattack.
Some of the benefits of cyber insurance are:
● Financial Protection:
Cyber insurance can help businesses cover the direct and indirect costs of a cyberattack, such as data recovery, legal fees, customer compensation
And business interruption to reduce the financial impact and burden of a cyber incident, and help businesses recover faster and more effectively.
● Compliance Aid:
It can help businesses comply with the relevant laws and regulations regarding data protection and privacy
It can also help businesses meet the contractual obligations and expectations of their customers, partners, and suppliers, such as providing adequate security measures and reporting breaches promptly.
● Security Posture Reinforcement:
In addition, Cyber insurance can help businesses improve their security posture by providing access to expert services and resources
Such as risk assessments, vulnerability scans, penetration tests, incident response teams, and cyber awareness training.
It also incentivizes businesses to adopt standard practices to reduce their risk exposure and premium costs.
Risks without Cyber Insurance
We have discussed what Cyber insurance can do to your business, and you will agree that it can provide many benefits for businesses
But if you don’t use Cyber insurance, what will happen? Read some of the risks of not having cyber insurance:
● Financial Damage:
Without cyber insurance, businesses may have to bear the full cost of a cyberattack, which is unpredictable.
According to a report by Accenture, the average cost of cybercrime for an organization was $13 million, an increase of 72% since 2017.
Without cyber insurance, businesses may face cash flow problems, reduced profitability, or even bankruptcy, as a result of a cyberattack.
● Reputation Deterioration:
Without cyber insurance, businesses may suffer reputational damage, as a result of a cyberattack.
Customers, partners, and suppliers may lose trust and confidence in the business and may switch to competitors or seek legal action.
As such, businesses may struggle to restore their reputation and regain their market share, after a cyberattack.
● Legal Entanglements:
Without cyber insurance, businesses may also face legal liabilities, as a result of a cyberattack.
Regulators, customers, employees, or shareholders may sue the business for negligence, breach of contract, or violation of privacy, and may seek compensation or penalties
Which they may have to pay hefty legal fees and settlements or face regulatory sanctions, after a cyberattack.
How to Choose the Right Cyber Insurance
Having seen many benefits that cyber insurance can offer your businesses as well as the poised risk without cyber insurance, you will agree that it is important to consider it for your business.
However, with the different types of cyber insurance available, you need to choose the right one for your business depending on needs, exposures, size, industry, and operations.
But then, how can you choose the right policy for your business? Below are some of the steps to take to choose the right cyber insurance.
1. Assess your risk profile:
The first step to take is to assess your risk profile, which is the nature of the risk you face from cyberattacks.
You can do this by identifying, analyzing, and evaluating the potential threats, vulnerabilities, and impacts of cyberattacks on your business.
2. Determine your coverage needs:
The next step is to determine your coverage needs, which are the types and extent of coverage you need from cyber insurance.
You can do this by reviewing your existing insurance policies, such as general liability, property, or professional liability, and identifying any gaps or overlaps in coverage.
You should also consider your legal and contractual obligations, as well as your business objectives and expectations, to determine your coverage needs.
3. Compare and select your policy:
The final step to take when choosing cyber insurance for your business is to compare and select your policy.
You can do this by requesting quotes from different providers and comparing them based on the coverage, limits, deductibles, exclusions, and premium services they offer.
You can also consider the reputation, experience, and service quality of the providers
As well as the value-added features and benefits they offer, such as risk management, incident response, or cyber awareness.
Issues with Cyber Insurance
As there are many benefits of Cyber insurance, it is not without its challenges and limitations.
Some of the issues with cyber insurance are:
● Limited historical data:
Cyber insurance is a relatively new and evolving product, hence, there is limited historical data and actuarial models to help providers and businesses assess the risk and price of the policies accurately.
This can lead to uncertainty, variability, and inconsistency in the cyber insurance market, and affect the availability, affordability, and adequacy of cyber insurance.
● Insufficient cyber hygiene:
Cyber insurance is not a substitute for cyber hygiene; it can only help you recover from a cyberattack, but it cannot prevent or stop one.
Therefore, businesses should not rely solely on cyber insurance, but also invest in cyber hygiene, such as implementing security controls, updating software, training staff, and conducting audits.
● Variable coverage:
Also, cyber insurance policies vary widely in terms of the types and extent of coverage they offer, as well as the terms and conditions they impose.
Some of the policies may have exclusions, limitations, or sub-limits that may reduce the coverage in certain scenarios, such as acts of war, intentional acts, or compliance failures.
Some of the policies may also have requirements, which may include reporting breaches within a certain time or using approved vendors, that may affect the validity or value of the coverage.
● Unpredictable danger:
Cyberattacks are unpredictable, and they can adapt to the changing threat landscape and security measures.
They can also have systemic effects, such as affecting multiple businesses, sectors, or regions, or disrupting critical services.
Which might make it difficult for providers and businesses to quantify the risk and impact of cyberattacks, and to ensure adequate and effective coverage.
● Potentially insufficient funds:
Cyber insurance requires a pool of funds that providers collect from businesses and use to pay out claims in the event of a cyberattack.
However, if the frequency and severity of cyberattacks exceed the expectations and assumptions of the providers, the funds may not be sufficient to cover all the claims
Which may result in delays, reductions, or denials of payouts, or even bankruptcy of the providers, leaving the businesses without the expected coverage and protection.
● The complexity of cyber risks:
Lastly, Cyber risks are complex, and they can affect different aspects of a business, such as its operations, finances, reputation, or strategy.
Cyber risks can also interact with other types of risks, such as operational, financial, or reputational risks, creating synergistic or compounding effects.
Which might make it challenging for providers and businesses to understand and manage cyber risks comprehensively, and to align cyber insurance with their overall risk management strategy.
Hence, some businesses may face ethical, social, or environmental issues, such as moral hazard, the digital divide, or the carbon footprint, as a result of cyber insurance.
Top Cyber Attacks of 2023
According to Infosecurity-magazine and Msspalert, the top cyber attacks in 2023 include
- Ransomware attack on Royal Mail which resulted in financial loss and data theft by LockBit Group.
- T-Mobile faces Enormous data breaches which affect tens of millions of customers.
- After a ransomware attack on the City of Oakland, they declare a state of emergency
- Clop ransomware group encountered MOVEit file transfer exploitation
- The US government entities were targeted by Chinese espionage campaign
- The UK Electoral Commission faces a complex cyber attack resulting in the exposure of voter data.
- After cyber attacks, Casinos were taken down.
- 23andMe encountered a data breach affecting millions of customers.
- British Library went through damage and revenue loss after it suffered a ransomware attack
- A ransomware attack on the Johnson Controls
The CRN also reported other notable attacks including on Dollar Tree’s supply chain, Australian port operations, and the ESXi ransomware attacks
Top Cyber Insurance Case Studies for 2024
Here are some of the top cyber insurance case studies for 2023, based on their outcomes, lessons, and implications
| Organization | Description | Bullets |
| Coalition Inc. | Coalition Inc. is a leading provider of cyber insurance and security solutions, offering proactive services to help businesses prevent, detect, and respond to cyberattacks. They assisted in helping organizations get better from cyber assaults and records breaches, along with incident reaction offerings and economic compensation for misplaced revenue. | Gave incident response services Provided financial compensation for lost revenue |
| Delinea | Delinea is a cybersecurity provider that offers various offerings, including cyber insurance. They assisted groups in mitigating cyber dangers and securing appropriate insurance, through implementing privileged get entry to control (PAM) and different protection controls | They helped businesses reduce cyber risks Used privileged access management (PAM) Secured appropriate insurance coverage |
| RUSI | RUSI is a renowned Royal United Services Institute (RUSI) specializing in defense and safety issues. RUSI explores cyber insurance and ransomware documents and how insurance companies respond to attacks, including case research of impacted agencies and insurance responses. | Analyses insurance responses to ransomware attacks including case studies of impacted businesses |
| Carnegie Endowment for International Peace | Carnegie Endowment for International Peace has encountered a timeline of cyber incidents regarding monetary establishments since 2007 | Maintained timeline of cyber incidents while providing insights into the evolving threat landscape and offering filter options by various criteria |
| HackerNoon | HackerNoon is a cybersecurity guide that covers developments and tendencies within the enterprise. An article curated on AI-powered cybersecurity talked about the top-use instances for AI in cybersecurity, including advanced malware detection, streamlining workflows, consumer authentication, access manipulation, and fraud prevention, with accompanying case studies. | While discusses top AI use cases in cybersecurity Including case studies of successful implementations it covers advanced malware detection, workflow streamlining, authentication, access control, and fraud prevention |
Top 10 Cyber Insurance Companies in 2024
As Cyber insurance is growing, there are many providers and policies to choose from.
However, not all providers and policies are equal. Some may offer better coverage, service, and value than others.
Here are some of the top 10 cyber insurance companies in 2024, based on their coverage, additional services, and customer satisfaction:
| Company | Coverage Offered | Additional Services |
| AIG | Data breaches Cyber extortion Business interruption | Access to a global network of cyber risk experts and resources |
| Chubb | Data breaches Cyber extortion Network interruption | Risk management services Access to a 24/7 cyber response team |
| AXA XL | Data breaches Cyber extortion Business interruption | Coverage for various industries like healthcare, financial services, and retail |
| Zurich | Data breaches Cyber extortion Network interruption | Risk management services Access to a global network of cyber experts |
| Allianz | Data breaches Cyber extortion Business interruption | Coverage for businesses of all sizes Access to a global network of cyber experts |
| Beazley | Data breaches Cyber extortion Network interruption | Specialization in cyber insurance Policies for industries like healthcare, financial services, and technology |
| Hiscox | Data breaches Cyber extortion Business interruption | Coverage for small and medium-sized businesses Access to a 24/7 cyber response team |
| Travelers | Data breaches Cyber extortion Network interruption | Coverage for businesses of all sizes Access to a global network of cyber experts |
| Liberty Mutual | Data breaches Cyber extortion Network interruption | Risk management services Access to a 24/7 cyber response team |
| CNA | Data breaches Cyber extortion and Business interruption | Coverage for various industries like healthcare, financial services, and retail Access to a global network of cyber experts |
How Much Does Cyber Insurance Cost?
According to a report by Insureon, the average cost of cyber insurance for small businesses in the United States was $1,485 per year or $145 per month.
However, this is only a general estimate, as the actual cost of cyber insurance may vary depending on factors, such as:
- The size and industry of the business: Larger businesses, or those in high-risk industries, such as finance, healthcare, or retail, may face higher cyber risk exposure and demand higher cyber insurance coverage and limits, which can increase the cost of cyber insurance.
- The security posture and practices of the business: Businesses with better security posture and practices, such as implementing security controls, updating software, training staff, and conducting audits, may reduce their cyber risk exposure and qualify for lower cyber insurance premiums, discounts, or incentives, can decrease the cost of cyber insurance.
- The provider and policy of cyber insurance: Different providers and policies may offer different types of coverage, as well as different terms and conditions, such as deductibles, exclusions, or sub-limits, which can also affect the cost of cyber insurance.
Hence, businesses should compare and select the provider and policy that best suits their needs and budget.
Can Cyber Insurance Take the Place of Cyber Defense?
The answer is simply No.
Cyber insurance is not a substitute for cyber defense. It can help you recover from a cyberattack, but it cannot prevent or stop one.
Therefore, do not rely solely on cyber insurance, but also invest in cyber defense, by
- Implementing security controls like firewalls, antivirus, encryption, authentication, and backup, to protect your systems and data from unauthorized access, use, or disclosure.
- Updating software and hardware regularly, to fix any bugs, vulnerabilities, or compatibility issues, and to enhance your performance, functionality, and security.
- Training staff and users on the standard practices and policies of cyber hygiene, such as using strong passwords, avoiding phishing emails, and reporting incidents, to raise awareness and skills, and to reduce human errors and negligence.
- Conducting audits and tests such as risk assessments, vulnerability scans, penetration tests, and incident simulations, to identify and evaluate your cyber risks and readiness, and to improve your security posture and resilience.
Together, cyber insurance and cyber defense can help businesses achieve cyber security and peace of mind.
Regulations on Cyber Security are Increasing
As cyberattacks become more frequent and costly, and as data protection and privacy become more important, governments and regulators around the world are increasing their efforts to enforce cyber security.
The UK updated its cyber laws to better protect against online threats, particularly to boost the US’s defenses.
The revised UK Network and Information Systems (NIS) Regulations aim to safeguard services like water, power, and transportation, as well as digital services such as cloud computing and search engines.
Under the new regulation, the services must report cyber incidents to authorities like Ofgem and the ICO, even if they don’t immediately cause disruption.
This will help regulators enforce the NIS Regulations more effectively, taking into account factors like company size to reduce the financial impact on taxpayers.
This will help the Information Commissioner to flexibly regulate digital services using a risk-based approach.
Moreover, these updates are part of the UK’s £2.6 billion National Cyber Strategy designed to provide a stronger response to cyber threats.
The UK NIS Regulations, which were introduced in 2018, require organizations that provide essential services to maintain strong cybersecurity measures. Failure to do so could result in fines of up to £17 million.
This move affects the increasing importance of cybersecurity, hence, companies are encouraged to invest in both cyber defenses and insurance to manage their risk amidst a growing number of cyber challenges.
Wrap Up
Cyber insurance helps businesses to mitigate the risk of cybercrime activity like cyberattacks and data breaches.
It covers the losses businesses may suffer as a result of a cyberattack, such as data recovery, legal fees, and customer compensation.
Cyber insurance is becoming more important as cyberattacks become more frequent and costly.
In this blog post, we have discussed cyber insurance types, benefits, risks, and issues of cyber insurance, as well as how to choose the right policy;
We also discussed its costs, and how it relates to cyber defense and regulations as well as some of the latest trends and developments in the cyber insurance industry, and some case studies and examples of cyber insurance in action.
We hope you have found this blog post informative and useful.
If you have any questions or comments, please feel free to leave them below.
We would love to hear from you and learn from your feedback and experience.
Thank you for reading.