Photo courtesy of nextgov.com
In 2017, the cyber insurance market accounted for $4.2 billion. Based on a recent report by Zion Market Research, the global cyber insurance market is projected to increase by 27% year-over-year to reach $22 billion by 2024. The increase is expected due to advancements in technology coupled with cyber insurance companies increasing sectors they provide cyber insurance for.
What is Cyber Insurance?
Cyber insurance is an insurance product that is used for protecting businesses from internet-based risks. Cyber insurance policies include coverage of expenses that companies incur against theft, extortion, hacking, and losses. Depending on your coverage, cyber insurance may also include covering the costs of notifying customers about a security breach and regulatory compliance fines.
Why is Cyber Insurance on the Rise?
Advancements in technology have changed the way we do business and the way we conduct our lives. Take the retail industry for example. If you don’t offer online shopping, your business isn’t going to survive. Look at the state of shopping malls all around the world; they are diminishing before our eyes. With online shopping along with mobile payment options, if you do decide to shop in-person, we have seen a steep incline in the number of retailers who have incurred a cyberattack. In fact, almost 16% of retailers have suffered a loss of over $1 million due to cyber attacks between 2016 and 2017.
Government agencies have also seen rapid technological advances as many are digitalizing their data, making them more vulnerable to data breaches. Between 2015 and 2016, cyber attacks on government agencies doubled. By 2020, an estimated 20% of government agencies will have adopted digital platforms. Due to the prevalent threat of cyberattacks by terrorist groups and various cybercriminals, the government sector will be another major driving force behind the steep growth of cyber insurance.
How Cyber Insurance Can Help Your Company
With the state of the cybersecurity world, it would be negligent for your company not to have cyber insurance. On top of that, if you incur a cyberattack without cyber insurance, it would cost your company way more money in the long run than it would to pay a monthly premium.
Cyber insurance is basically like any other form of insurance. You pay a monthly premium, and if you fall victim to a cyberattack, you pay the deductible, and the cyber insurance covers the rest, depending on your policy.
“There are fines and penalties in a lot of cases, there are notices you have to send out to everyone that gets their information shared by your hack,’ Tucker Compton, a cyber insurance agent at Brock Insurance Agency based in Chattanooga, Tennessee commented. “The basic sense of insurance, what it’s there to do is stop you from going under and make it so you don’t have a large unexpected expense… it can save your business and your livelihood.”
For example, let’s say you became the victim of a ransomware attack. The ransom demanded is $8,000, and you decide you need to pay it to regain access to your encrypted files to continue business operations. If you have cyber insurance, you pay your deductible while the cyber insurance provider pays the balance, if that’s how you’ve set up your coverage. Let’s say your deductible is $2,500. The only out of pocket costs you are going to have is the $2,500. If you didn’t have cyber insurance, you would pay the full $8,000 plus any other compliance or regulatory fines, lawyer fees and charges for a forensic investigation, which can run in the tens of thousands of dollars.
It doesn’t matter what sector your business is in, accepting the cost and purchasing cyber insurance for your company could be what keeps your company afloat after a cyberattack.