What is Cyber Risk Insurance?
Cyber Risk Insurance, also known as Cyber Liability Insurance or Cyber Insurance, is a type of insurance that protects businesses from risks associated with network and data security, breach of privacy, and other cybersecurity-related issues.
Cyber Risk Management Insurance also covers the financial damages incurred by you (first-party losses) or your clients (third-party losses) in case of a data breach or any other cyber crime against your organisation. It can pay for the services that minimise the consequences of lawsuits and liabilities on your firm and provide coverage for cyber extortion threats and associated costs such as ransom payments.
Cyber Security Insurance policies are tailored to the specific needs of an organisation, covering a wide range of risks associated with the use of technology and the internet. It is advisable for businesses to regularly review their Cyber Security Insurance policy to ensure it meets their specific needs and provides sufficient coverage.
Who needs Cyber Risk Insurance?
Commercial entities of any size, including businesses, organisations and institutions, should consider investing in Cyber Risk Liability Insurance to protect against cyber threats and mitigate cyber risk management costs.
- Any business or organisation that stores, processes, or transmits sensitive data online.
- Any business or organisation that relies on technology and the internet to conduct business.
- Any business or organisation subject to data protection and privacy regulations, such as GDPR and HIPAA.
- Any business or organisation exposed to reputational damage if its data is breached or leaked.
- Any business or organisation that could suffer significant financial losses due to cyber-attacks.
- Any business or organisation that could be held liable for damages caused by a cyber-attack.
Why get Cyber Risk Insurance?
Cyber Risk Insurance is an essential protection for businesses in the digital age. With the data protection law now being enforced with comprehensive guidelines in the UAE, Cyber Risk Insurance has become considerably more vital and relevant.
Besides the major first party and third party coverages, here are some valuable benefits that you can avail of with this policy -
- It provides financial security and protection from cyber threats, such as data breaches, ransomware attacks, and other cyber-related incidents.
- With Cyber Risk Insurance, businesses can feel confident that they will have the required coverage to recover from any losses incurred due to a cyber attack.
- Cyber Risk Liability Insurance covers the costs of claims against a business (including compensation payments to those affected by the breach), legal fees, and settlements.
- Cyber Insurance Coverage also includes notification costs and public relations services to help manage the reputational damage caused by a cyber incident.
- The policy may cover the loss in revenue (business interruption) of the insured business following a cyber incident.
- The policy also covers the lawyers fees and other forms of defence costs incurred if a lawsuit is filed by data subjects following a cyber attack that causes privacy breach.
Common Risk Scenarios in Cyber Risk Insurance
Given below are some common risk events associated with Cyber Risk Insurance:
- Malicious Software: Malicious software in a business's computer system that puts the business at risk
- Data Breach: Customer or client data breach which jeopardises a business’s reputation and requires robust remedial measures
- Network Security: A compromised network that harms a business which depends on technology for its operations
- Business Interruption: Any disruption in business activity due to cyber attacks or any IT-related incident that leads to a loss of income
- Cyber Extortion: Responding to a ransomware or cyber extortion attack.
- Cyber Liability: The required compensation in case a third-party claim alleges damages due to a security breach or other cyber incident
- Regulatory Fines & Penalties: The business would be liable to bear costs associated with the investigation and payment of fines and penalties related to the cyber incident
Major Inclusions of Cyber Risk Insurance
A Cyber Insurance policy usually provides two types of coverages - first-party and third-party coverages. The costs and expenses incurred following a data breach or network security breach on the insured's computer system or network are covered under first party coverages. On the other hand, expenses and costs incurred due to a data breach or network security breach on the computer system or network of the client/third-party are covered under third-party coverages.
Listed below are the major inclusions under these plans -
- Forensic costs
- Cyber extortion payments
- Ransomware attacks
- Employee data fraud
- Multimedia liability
- Legal and defence costs
- Business interruption loss
- Data restoration costs
- Credit monitoring expenses
- Crises management and PR expenses
Major Exclusions of Cyber Risk Insurance
Here are the standard exclusions of Cyber Insurance -
- Criminal acts
- Wilful non-compliance of any statue
- Dishonest conduct
- Prior claims and circumstances
- Email spoofing & phishing (covered under commercial crime insurance)
- Bodily injury claims
- Losses or damages caused by war or acts of the government
- Professional service claims
Factors Determining the Prices of Cyber Risk Insurance
To get the best deal when getting a Cyber Risk Insurance policy, it is necessary to be aware of the costs involved and the factors that impact them. Listed below are the factors affecting the cost of Cyber Risk Insurance -
- The size and nature of the organisation: The size and nature of the organisation play a significant role in determining the cost of Cyber Risk Insurance. Generally, a company with a large number of employees would be charged more for the insurance compared to organisations with lesser employees.
- Type of data: The nature and size of data that a company handles has a direct impact on premium calculation. Companies handling financial and health care data, for instance, are generally looked upon as risky, which reflects in the higher insurance costs.
- Cyber security measures: The presence of advanced cyber security measures in an organisation can reduce the cost of Cyber Risk Insurance.
- Deductible amounts: Organisations that opt for higher deductibles on their Cyber Risk Insurance policies can expect lower premiums.
- Cyber Insurance Coverage limits: The coverage limit opted for by an organisation will also affect the premiums, with a higher coverage limit relating to higher premiums as well.
- Business continuity plan: In case a company has a business continuity plan in place (the protocols and the course of action to be followed in case of an emergency), their premium for the plan may be reduced
- Past claims experience: If an organisation has a record of making cyber insurance claims multiple times in the past, its premiums can be on the higher side
In this technology-driven world, businesses must necessarily safeguard themselves against cybersecurity-related issues that may threaten their operations and cause significant losses. With Cyber Risk Insurance, you can easily be secured against the same in a straightforward manner.
Understanding the significance of customised insurance that caters to your specific requirements, we, at Policybazaar UAE, provide you with world-class, cost-effective risk management strategies through insurance. With our solutions, you can have peace of mind and make plans to fulfil your future goals without stress.