Companies Buy Insurance To Protect Their Business Against Cyber-Attacks
In the business industry, you need to be highly adaptable and have a state-of-the-art concept to have a competitive edge. If you remain stagnant and rigid with your business model, chances are, you won’t be able to meet your customer’s changing demands. If this happens, you will lose your customers that may lead to your bankruptcy. That’s why in the digital age, most businesses are going online and even setting up their social media accounts to reach their customers worldwide and make transactions with them.
The digital information age offers such convenience on both customers and business firms. However, one downside of e-commerce is that these business firms, even their customer’s personal information, and data, are prone to cyber-attacks. Cyber-attacks are deadly in a sense that not only it can steal your identity, but also your hard-earned money. This risks or vulnerability prompted the company firms to start buying insurances in order to protect their business.
Cyber-attacks Are on the Leash to Attack Online Business Firms
The latest victim of the cyber-attack was the Youbit, an online Korean platform for bitcoin users. They filed for bankruptcy after their security was breached. The company lost around 4,000 bitcoins and 17% of its shares stock because of the attack. Cyber-attacks have a variety of attacks like identity theft, fraud, stealing bank card information, as well as hacking your money directly that can be detrimental not only to your customer’s welfare but for your business’ credibility too.
In fact, according to CSIS, the Center for Strategic and International Studies, around $400bn or around £291bn, already reported annual losses of business firms because of cyber-attacks. The deadliest cyber-attack that happened so far was the WannaCry attack that affects around 99 countries worldwide. These prompted business firms to buy insurance in “mad panic”, as stated by a cyber-security CEO.
Insurance Company’s Number of Business Insured Clients Had Surged High For the Past Year
That’s why it’s not so surprising to see a high surge of business clients applying for insurance. In fact, the Lloyd’s of London insurance company which offers cyber insurance had recorded that their number of clients leaped up to 70%, it doubled their records that they made a couple of years ago. Furthermore, the giant British insurance company Allianz, also forecasted that the number of clients will keep booming over the next couple of years. And because of the high demand, they also predicted that the insurance premium costs for cybersecurity will increase to $20bn for the year 2025, compared to its current $3bn pricing now. Hiscox, another CEO of an insurance company firm, admitted that his company is also enjoying for the robust growth of their insurance clients.
As an Insurer, How Can You Assess Your Cyber Risks and Propose a Definite or Accurate Premium?
This has been the dilemma of some business owners why they are hesitant in acquiring the cyber insurance. They just don’t have any idea on how you can assess your risks accurately. Unlike in a home or car insurance, you can assess the risks of those properties easily because the product isn’t changing for a couple of years. Cyber-attacks, on the other hand, are evolving and upgrading in order to hack. This means that your risks assessment would change from time to time.
Mr. Wharton claimed that assessing their cyber insurance is really up to the insurers. However, they wouldn’t leave them in the dark. They can guide their clients into learning and invest about cybersecurity. Upon application, the insurance firm will inspect the company itself to know whether or not they have the basic cybersecurity features such as antivirus, firewall, whether the software has been updated frequently, or not, and data backup. If your firm lacks these features, they can also provide cybersecurity training for your business to implement security measures aside from the insurance you’ll be paying in.
When it comes to determining your risks and premium coverage, they’ll also have to assess your business needs. Do you want to get insured with protecting your client’s data and financial information as well? Do you need a recovery plan or backup plan in case your main security fails? Is your company in need of locking up or securing and encrypting sensitive information? Does your company vulnerable to cyber-attacks? Among others.
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