Cybercrime is no longer just a concern for large enterprises, as cyber-attacks increasingly target smaller organizations. Plus, with the cost of data breaches estimated to be an average of $7.3 million for Canadian organizations in 2022, it’s crucial to have proper cybersecurity measures in place.
But as the number and severity of cyber insurance claims continue to rise, insurers are increasing premiums, making it harder for businesses to get coverage. The Council of Insurance Agents & Brokers (CIAB), an association for commercial insurance and employee benefits intermediaries, reported a 28% increase in Cyber insurance premiums during the first quarter of 2022 compared to the fourth quarter of 2021.
Plus, with rates continuing to rise and limited coverage offered by insurers, obtaining or affording cyber insurance could become a challenge for many companies. Keep reading to gain insight into the fundamentals of cyber insurance and secure your company’s coverage.
What is Cyber Insurance?
Cyber insurance, also known as cybersecurity insurance, is a policy that can help businesses offset the financial risk exposure caused by cyber threats. Simply put, it’s like an extra layer of protection against damages and recovery costs arising from data breaches, ransomware attacks, or other cybersecurity incidents.
In the past, traditional insurance policies only covered physical asset breaches or business interruptions due to cyberattacks. But with the increasing number and severity of cyber threats today, the losses have expanded significantly.
That’s why more and more businesses are opting for stand-alone cyber policies to address their specific risk exposure needs. Let’s see why cyber insurance matters and whether you should consider it or not.
Why Is Cyber Insurance Important?
If there’s one thing we’ve learned from the digital age, cyberattacks are a serious threat to businesses of all sizes. And with the increasing risk of cyberattacks, companies risk losing valuable data and suffering significant financial losses, not to mention damage to their reputation.
That’s where cyber insurance comes in—it’s like a superhero cape for your company, protecting you against the risks of compromised data and security breaches. Cyber insurance protects against these risks by covering security incidents and acts of cyberterrorism.
Take Marriott International as an example: after experiencing a massive data breach that exposed sensitive information belonging to half a million guests in 2018, the company faced over $250 million in liabilities and penalties.
Thankfully, their cyber insurance was able to help mitigate some losses. This example shows how important investing in cyber insurance is to protect yourself and your business from potential cyber threats and their devastating consequences.