Cyber insurance is designed to mitigate losses from a variety of cyber incidents, including data breaches, business interruption, and network damage.
Clarity with a staff of 30 was looking to protect the information it takes from the clients it places, like their Social Security numbers and dates of birth. The initial coverage it bought covered any legal costs and the costs of lost business that would come with a breach, and it added coverage for credit monitoring if its client data are hacked.
It may help reduce the number of successful cyber attacks by promoting the adoption of preventative measures; encouraging the implementation of best practices by basing premiums on an insured’s level of self-protection; and limiting the level of losses that companies face following an attack.
Many companies nevertheless forego available policies, citing their perceived high cost, a lack of awareness about what they cover, and uncertainty that they’ll suffer a cyber attack as the basis for their decisions.
Just about every business today needs cyber insurance. More and more businesses are transacting online and the reality is it’s only going to increase as we move forward.
Introduced more than a decade ago, cyber insurance’s growth has been spurred not only by an increase in cybercrime, but also by new regulations.
Most states now require companies to notify customers if there is a data breach. Cybercrime is also a growing concern in the boardrooms of publicly traded companies.
Cyber insurance policies will depend on a company’s size and the industry in which it operates, how much data it has and what a company already does to secure it.
For Clarity, the risk of not having cyber insurance outweighed the cost. “It’s never one of those things you want to find out if it’s worth having or not,” Wade said. “But it certainly helps us to rest easy at night and focus on our business, knowing that we have it.”