5 things you must know about cyber insurance for your business
Judging from the title, you may be wondering whether this article is relevant to you or your business at all? But take a few seconds to comprehend the following:
- Are you the business owner or senior manager of a small or large business in China?
- Does your business operate using I.T infrastructure and authorizes digital financial transactions on a daily basis?
- Are you at risk of a cyberattack that is likely to bring your business to a standstill, and in the worst case be responsible for the complete financial compensation to customers or partners?
If the answer is yes and you haven’t secured cyber insurance before reading this, then spare a few minutes to get a quick rundown from Pacific Prime China, on the 5 things you must know about cyber insurance for your business.
1. What is cyber insurance?
Cyber insurance is a form of insurance that covers a business’s liability for data breaches, malware, ransomware, distributed denial-of-service (DDoS) attacks, and the loss of financial and personal information, such as names, birthdates, social insurance numbers, health records, account numbers, residential details, and so forth. Essentially anything that elicits the identity of an individual, which is then used to commit an act of fraud in the form of corruption or transaction of unauthorized funds.
Cyber insurance kicks in when a business experiences a critical network security failure, with the majority of policies covering:
- Legal fees and court expenses
- Investigative costs related to the data breach
- The cost of implementing mandatory customer notification requirements
- The cost to recover critical and sensitive data
- The cost to restore compromised software, systems, and I.T infrastructure.
What if the business is already covered by a general liability policy coverage?
Interestingly, while most businesses have insurance in the form of a general liability policy, cyber insurance is usually excluded from a general business insurance policy. In other words, regular business insurance almost certainly excludes network security failures, hacking, spear-phishing campaigns, or similar events. When securing cyber insurance, it is important to check carefully the terms and conditions of the policy with your insurance broker during the comparison and quoting process.
What is the trend? Are businesses seeking cyber insurance in addition to their business liability insurance?
According to KPMG, the market is projected to rise from US$2.5bn in 2015 to US$7.5bn in 2020, reaching US$20bn in premiums by 2025.
Undeniably, organizations across the world are increasingly investing in cyber insurance simply because the risks are too high. Businesses have no choice but to secure cyber insurance to protect their financial assets and sensitive data.
There is also a growing theme of clients insisting that their business partners have insurance for compliance purposes and regulatory requirements. This often forms part of their contractual agreement before executing business and transactions.
Regardless of size, small businesses too should look to securing cyber insurance, not only to protect against financial losses and cover those extortionate costs, but to gain credibility as well. This is a genuine benefit for those wishing to secure future business and evolve with the threat of a cyberattack.
2. Don’t ignore investing in a solid security program
It is important not to be fooled by the knowledge of having cyber insurance into thinking that the business will be fine, and everything will work out. In reality, this is the wrong business mind-set to have and any business leader with the right form of business acumen will opt to invest time and effort in establishing an effective security program.
While cyber insurance may reimburse costs, it cannot mitigate the reputational damage incurred by a security incident or breach involving sensitive business information and data protected client details. Cyber insurance, from a client or customer’s perspective, will not reinstate trust post data breach.
According to Michael Page, cybersecurity is more than a forward-thinking move, as it is becoming a company stable for all business owners that plan to stay afloat in today’s economy. Building an internal cybersecurity team is by far a smart decision – it will give the company leverage against competitors, and the workforce is given the opportunity to develop best practices to protect their own details as well as that of their customers.
3. It shouldn’t be managers making the decision, I.T professionals should have an input too
While insurance is often brought to the attention of key financial members of the business, such as at the CFO level, the I.T department should be the next body of professionals kept in the loop, and should be involved at the outset to help evaluate policies and coverage levels.
I.T professionals and experts know full well the trends, or are at least aware of the necessary steps to mitigate any possible attack. They are trained and qualified to understand the technical language and definitions that others less tech-savvy cannot.
4. Cyber insurance can provide effective risk management
Companies and businesses vary in size, there are many large, corporate, and global entities that are fortunate to be self-sufficient in managing their own security features and systems. They fulfill compliance and regulatory requirements by having a solid data breach response plan that ensures the operation of the business continues during a cyber crisis. However, the majority of small businesses may have tight budgets that do not allow for such oversight, investment or preparation.
The good news in these cases is that a good cyber insurance policy can fill this role. Cyber insurance, subject to the provider of the insurance, perform functions similar to a dedicated risk management team. This is due to the insurer offering the service of making sure security features such as the firewall is in place to protect your network, and introduce social media or email policies that can reduce the risk of a breach.
5. How to choose a cyber insurance policy
If you have closely followed all the points up to now, you are probably more convinced than ever to secure cyber insurance or at least find out the process of choosing a policy that meets your business needs.
Generally, as with all types of insurance ranging from individual health insurance, company health insurance to professional indemnity insurance for businesses, there is no one-size-fits-all policy for cyber insurance.
If your business is centered in the healthcare industry, you may require greater privacy insurance coverage than another type of business. If you are in the technology sector, you may also need cyber coverage that protects you from data loss caused by third party cloud, software, or IT provider breaches. Even schools are at risk with details of children available to hackers that breach their systems.
With industries portraying various risks and the coverage differing from business to business, it is essential to seek the guidance and support of an insurance broker such as Pacific Prime China.
Pacific Prime China can offer your business cyber insurance coverage
When it comes to finding the best cyber insurance for your business, you are often presented with a lot of options but without specific details as to why they are fitting for your business.
You could work with an insurance agent in China, however, this limits your choices, as the agent will most likely only offer coverage from one insurer.
This is why many businesses, small and large, choose to search for insurance through an insurance broker like Pacific Prime China. With the nationwide carrier partners, you can get a tailored quote that yields the coverage you need to have peace of mind when doing business wherever around the globe.
Contact us today for impartial insurance advice, an obligation-free quote, and a plan comparison!
Disclaimer: Pacific Prime China solely represents, operates and manages locally regulated insurance products and services in the territory of PR China. Any references to Pacific Prime Global Company or Group, the international services, insurance products or otherwise stated written or verbally, is for introduction purposes about our overseas network only as each entity is fully independent.