Every company relies on digitalization – fortunately! In the long term, this is essential for competitiveness and for reaching customers and target groups. But it is precisely this shift to an increasingly digital business world that offers a major new target: cybercrime. This is no longer a foreign concept and everyone is aware of its consequences. This is precisely why some people are turning to cyber insurance to protect their company against attacks of all kinds. Is this THE solution? What should YOU as an entrepreneur look out for? We clarify this in this article.
What exactly is cyber insurance?
Similar to car insurance, it protects companies or individuals in the event of damage to digital data traffic. This can be financial losses to third parties (e.g. leaked, digitally managed customer data) or damage to your own business (e.g. business interruption). It applies in the event of damage caused by cybercrime, as well as in the event of various IT security incidents. For example, if damage was caused directly by an employee. Just as car insurance is offered by countless different companies with a wide range of benefits and costs, there are also major differences in tariffs and providers.
A breakdown of the tariffs
A wide variety of things can be covered by cyber insurance. Even things that you might not think of at first. We have divided them into 3 categories for you. An overview:
- Direct damage to your own business:
Loss of business / business interruptionCompensation for loss of revenue due to downtime
Own damageFurther damages incurred by you or the company itself (contractual penalties due to delay in delivery)
Insured personsAll persons in the company can be insured. This means that it is irrelevant whether you as the entrepreneur are responsible for the damage or an employee.
- Damage to third parties:
Third-party damageCompensate your affected customers (e.g. loss due to delayed delivery) and at the same time defend against unjustified claims
- Follow-up costs:
Data recovery: The insurance covers the costs of (data) reconstruction and recovery of computer systems
IT experts / IT forensic expertsIf there are no suitable external service providers, the insurance company will send experts to uncover or analyze the cause and the exact damage and prevent possible consequential damage. Your own staff are not allowed to do this.
Legal advice / legal protection Advice from lawyers who are professionals in the field of IT and data protection law is provided.
PR damageThe reputation of your company can quickly be severely damaged by negative press in the event of a cyber incident. In this case, the insurance company will arrange competent crisis management to take care of your PR.
What’s the catch?
As with everything in life, there are pros and cons to cyber insurance.
Let’s start with the benefits of cyber insurance:
As far as the disadvantages are concerned:
COSTS
It covers INCREDIBLE amounts of damage, which means that these insurances are not exactly cheap.Costs
As with other insurance policies, the price of cyber insurance varies greatly depending on the provider and tariff.
A clear distinction is also made between individuals and companies:
If individuals want to insure themselves, they can choose between clearly defined tariffs.
However, if you want to insure your company as such, it is more difficult. In this case, the price depends on the company:
- Company size
- Turnover level
- Sum insured
- …
Of course, other factors also play a role:
- Contract term
- Payment frequency
- Excess amount
- …
The price of such insurance is definitely not exactly low.
Insurance companies protect themselves:
Not everyone gets insurance and it doesn't always automatically apply.Insurance companies protect themselves
Cyber insurance companies have questionnaires that ask, for example:
- Which data retention/protection measures are implemented (type of listing, back-ups, secure deletion, …)
- What about network security (firewall, virus protection, …)
- What the company’s claims history is like
You are expected to have up-to-date protection yourself in order to be eligible for (affordable) insurance.
After all, no insurance company is happy to cover any costs for damage that could have been prevented in the first place.
And depending on what has already been implemented, the costs for the insurance may also be higher or lower.
However, anyone who does not answer this document truthfully is not doing themselves any favors.
In the event of an emergency, it will of course be investigated how this could have happened. A detailed report will be requested. If it comes to light that certain stated protective measures have not been implemented, an insurance company will also refuse to pay out.
Conclusion:
Cybercrime is growing. Small and medium-sized companies are also increasingly falling victim to such attacks(for more information, see: BKA Cybercrime Situation Report 2020). And anyone who works with an eye to the future knows that digital data traffic will not decrease in the future, but will continue to expand.
If you work with confidential/sensitive customer data and company secrets and also use IT systems, you have to live with the fact that you are a potential target for cyber attacks. In addition, there is always the risk that you may suffer collateral damage as a result of a cyber attack on one of your suppliers, partners or customers, for example, and have to bear the consequences. It is therefore worth investing in insurance that can provide comprehensive security and assistance in the event of an incident.
However, this is only one side of the coin. To really secure your company, you should do everything you can in advance to m We aim to uncover potential safety risks, train employees and eliminate hazards where possible.
This is not easy and often requires outside help. With advisory support, this issue can be tackled with the appropriate expertise and without “operational blindness”.
What does that look like for us? Take advantage of our free initial consultation!
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