Given the increasing number of data breaches these past few years, companies are beginning to understand how real cybersecurity threats truly are. As a result, these same companies have started to recognize the importance of cyber insurance coverage.
Cyber insurance coverage may sound made up to some, but this new product became available in the late '90s and has grown in popularity since. Today, there are approximately sixty carriers offering cyber insurance policies with over $2 billion spent on coverage in the market. Soft estimates predict the market will grow to nearly $7.5 billion within the next five years.
How Much Coverage Should I Get?
As with any insurance policy, the coverage provided is largely dependent upon the policy itself. That said, with a cyber insurance policy, several common coverages exist. They include liability for defense costs and settlements; crisis management for credit monitoring services and public relations; business interruption; loss/replacement of electronic data; expenses for cyber extortion; and expenses for regulatory compliance.
General Costs of Cyber Insurance
Cyber insurance costs can vary. Carriers are interested in a company's risk management techniques as much as its antivirus and antimalware software. They also care about the number and type of firewalls the company has deployed.
Carriers will also look into the type of disaster response plan that is in place, company procedures like how employees access data and whether the company has cultural controls in place that will prevent fraudulent activities or breaches to occur.
This is a new horizon for attorneys as well. Look for practice areas to expand into cybersecurity. While victims have filed suits against companies who suffered large data breaches recently, the very complexity and adaptability of cybersecurity creates a vulnerable environment where the people's most critical and private information can fall into the wrong hands.
Companies that suffer these breaches must be held responsible. Not only will this help to alleviate the damages victims of the breaches suffer, it helps drive the movement that companies must take their cybersecurity practices seriously. The growing cybersecurity insurance market is a result of this trend, and companies who handle an individual's sensitive information must ensure they are keeping that data safe and secure.