Posted on Feb 25, 2020
Cybersecurity is shattered. From mom-and-pop shops along America’s Main Streets to Fortune 500 companies, all businesses are potential targets. To protect their bottom line, more corporations are investing in cyber insurance as a method to cover expenses resulting from cyber threats.
Cyber-attacks have grown at outstanding rates over the past decade. In 2018 alone, there was a 350% increase in ransomware attacks, a 70% increase in spear-phishing attacks, and a 250% increase in business email compromise (BEC) attacks.
There are several key factors that are the driving forces behind the rise of cyber incidents, including:
This all means one thing for the cybersecurity insurance market – it will skyrocket. In fact, a recent report by Androit Market Research suggests that the industry will grow from $4 billion to over $23 billion during the next six years alone as more firms invest in cyber protection.
Cybersecurity insurance, also known as cyber risk insurance or cyber liability coverage (CLIC), will cover a business’ liabilities in the event of a data breach involving sensitive data including credit card numbers, Social Security numbers, and health records. In addition to covering legal expenses and fees, cyber insurance can notify clients about a data breach, fix damaged computer systems, and restore the affected customers’ personal identities.
Cyber insurance debuted on the market in the spring of 1997 and catered to IT companies that were responsible for overseeing systems and networks utilized by other consumers and businesses. Since then, the market has expanded to encompass three forms, including first-party written coverage, third-party written coverage, and implicit cyber coverage, also referred to as non-affirmative cyber exposure.
What businesses need cybersecurity insurance? The short answer is every business. All types of commercial entities, including not-for-profit organizations, corporations, and educational institutions, can benefit from having cyber insurance if they collect, process, and store financial or personal customer or employee data.
This sensitive information makes both small and large companies potential targets. All it takes is one successful attack to cause a costly breach of data.
Some reasons you should consider getting cybersecurity insurance are:
The cybersecurity insurance sector currently covers a small percent of losses that businesses incur after a cyber attack. However, with the rise in malicious cyber activity that have cost the U.S. economy billions of dollars ($109 in 2016) and the $356 million in claims insurance companies have received from policyholders, it is evident that cybersecurity insurance needs will substantially increase.
The cyber insurance sector is trending upward and technologies are evolving at a lightning-fast pace. Regulation trends, the development of cyber risk pools and increasing awareness about cyber risks will all aid in the bright future of this industry.
Cybersecurity insurance is essential for companies of all sizes. Not only does it help businesses to mitigate risk exposure by offsetting cyber attack costs, but it also helps to notify customers and employees in the event of a cyber incident.
If you are a business owner, now is the time to invest in this critical insurance.
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