It’s no secret that cybersecurity has become a major issue for businesses. Many companies are beefing up their efforts to protect themselves against cyber threats from hackers. They are setting up controls to prevent cyber breaches and improving their managed security services.
Almost two-thirds of all companies now have cyber insurance to manage IT security risks. Large corporations have the highest rates of cyber insurance.
What is Cyber Insurance?
Cyber insurance is a specialized product designed to protect companies from technology risks. Although this type of insurance has been around for more than 10 years, it has been gaining in popularity because of high-profile electronic data breaches.
Cyber policies generally offer two kinds of coverage. The first covers losses to the company itself. The second covers claims that are made against the company by customers or business partners.
Cyber coverage is different from other coverage because it is far from standardized. The main reason for this is it is not easy for insurers to assess the degree of risk involved. To determine the risk, insurers look at things like the size of the business, the nature of the data stored and used electronically, and the overall security setup at the company.
Even so, it is often difficult to assign a dollar amount to the risk to the business. There is not a lot of information available on losses resulting from data breaches. In addition, it can be difficult to determine a company’s ability to defend itself against such breaches.
It can be problematic for insurers to figure out how high premiums ought to be and for companies to figure out how much insurance they need.
Because of this uncertainty, it is likely that risk-assessment tools will become more prevalent among businesses. These types of tools can help both the insurers and companies being insured determine what the level of risk is to the company.
It is also possible that insurance companies will be setting up cybersecurity departments, which will provide services like cybersecurity analysis for companies, monitoring companies’ responses to cyber breaches, forensics and other services.
The way companies look at cyber risk is still changing, but it seems clear that cyber insurance is here to stay.
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