Cyber Insurance Policy

Cyber insurance, like other liability insurance, uses similar terms but covers businesses against cybercrimes. To understand the insurance, it is first important to know what is cyber crime.

In this digital age, all businesses must have an online presence to stay relevant. But it comes with risks of cyber crimes such as cyber hacking, data breach, data loss, etc. It may cost a fortune to compensate and restore data for such losses.

These miss-happenings may also lead to legal fees for attorneys, fines for consumers, or even hefty extortions. Traditional commercial or product liability insurance does not cover such risks.

With cyber insurance policy, companies share a part of that risk with the insurer. In exchange for a monthly premium, the owner is liable to coverage in case any cybercrime occurs against the company. It covers any internet-based crime, especially those related to data security in the IT sector.

Cyber insurance covers almost all kinds of IT-based crimes:

•  Siphoning of funds- Siphoning of funds directs an organisation’s funds towards an unintended use. This is a form of stealing done through cyber hacking.
•  Identity Theft- This is the theft of an individual’s identity to commit a crime as that person. These include both company credentials and individual information.
•  Online bullying or cyber stalking- any cases of receiving threats online. Individuals can accomplish this by stalking someone online or possessing vital information about them.
•  Online shopping- any unintentional transactional malfunctions or data leaks during online payments may come under cyber insurance coverage.
•  Malware attack- A malware attack uses unauthorized software to disrupt the owner's system with unapproved actions.
•  Data and privacy breach- refers to the unauthorised use of confidential data. This crime causes a loss of trust in the organization and often leads to costly reimbursements. For instance, if there's a data breach, a credit card company might need to issue new cards to all customers. Cyber insurance often includes credit monitoring services as part of its coverage to safeguard against credit card fraud and identity theft.
•  Cryptocurrency loss- Since cryptocurrency isn't legal tender in India, cyber insurance doesn't cover losses related to it.

In recent years, there has been a significant increase in cybercrimes in India. In 2021, 52,964 cybercrimes occurred, with over 70% reported in just five states, as per crime statistics.

The emergence of RAAS (ransomware-as-a-service) is also a critical factor in driving the cyber insurance market. It has made threatening and extortion easier, adding to internet-related risks for businesses.

Such developments are making consumers increasingly aware of cybercrimes. They now have a preference for companies that provide data protection and reliability. Therefore, cyber insurance is getting more prevalent than ever.

The penalty associated with data breach restoration is surging, making it harder for even established businesses to manage such expenses. Hence, more and more organisations now choose to rely on cybersecurity insurance.

As a growing economy, India is facing more exposure to such crimes. This leads to more awareness about what is cyber crime among the masses and, in turn, cyber laws.

The EU's adoption of the GDPR has notably affected India's cyber insurance sector. It’s a set of rules designed to safeguard and handle personal information and data. These guidelines protect the rights of individuals within Europe and come with significant fines if not followed.

The GDPR law applies to companies in the European Union, regardless of their location outside the EU. The GDPR law applies to EU companies, irrespective of their location outside the EU. Indian and other foreign companies must also follow GDPR if they have operations or offer services to people in the EU.

These companies must enhance their data protection practices. They should implement new security measures and encryption systems to safeguard data privacy.

Furthermore, experts anticipate that India will soon present the draft Personal Data Protection Bill (PDPB) in Parliament. Observers expect this bill to become one of the most influential global data privacy laws. It surpasses the EU GDPR and the California CCPA in certain aspects.

Once in place, this cyber law in India will apply to almost all businesses operating here. It will mandate businesses to thoroughly review their data processing practices, policies, and security measures. They must do this to comply with the new law.

In the current scenario, any organisation functioning on the web is not entirely safe from cyber threats. Having an online presence comes with the risk of catching the wrong eyes. Hence, very few companies or individuals may do without cyber security insurance.

An individual or organization with a significant online presence, such as social media or a personal website, must have cyber insurance. This safeguards against potential threats, including online transactions with customers and remote working teams.

Specific organisations are more prone to web security risks. These include all IT firms, social media businesses, and data-based industries. Furthermore, consider sectors with access to vital customer information, such as medicine, pharma, and related industries.

Despite the surging fame, cyber insurance is still pretty recent in India. The company that opt for this policy are among the early adopters. Yet, it is as crucial for your business as any other physical insurance, if not more.

The first party in the context of cybercrime insurance is the person/owner or organisation that purchases the insurance. The party pays the premium amount and holds the right to raise a claim in case any attack occurs.

Cybersecurity insurance covers the third party, even without their purchase. The insurance aims to compensate or protect the third party against a risk. In the case of cyber insurance policy, the customers of the company and audiences would be the third party.

Out-of-pocket expenses include the costs that the first party compensates. The insurer and the company mutually agree upon these expenses through an agreement. This includes deductibles, co-insurances and copayment agreements. It refers to the expenses that the insurance company does not cover.

The advantages of Cyber Insurance are:

•  Online Security - Cyber insurance provides a secure online environment for transactions and business. Customers experience safety, and companies receive financial assistance during crises.
•  Early detection of threats - During online company audits, cyber insurers can detect early flaws and provide warnings. This could avoid potential attacks.
•  Increased flexibility - Cybersecurity is gaining popularity recently. Cyber insurance offers greater flexibility than other policies, which adhere to strict protocols. It allows for more customisation and additions as required.

The limitations of cyber insurance include the following:

•  Incentivising and normalising online ransomware - Some critics argue that the role of cyber insurance should be to minimise acts of web crime. Conversely, it validates malpractices by paying the demanded ransom, doing the opposite.
•  Questionable results - Since cybersecurity is a rapidly developing area, there are no readily measurable outcomes to demonstrate the success of cyber insurance. This leads to some people doubting the benefits of these policies.
•  High-cost premium - The compensation costs of online attacks are much higher and harder to predict. Hence, the premium cost of cyber insurance is generally higher than other physical insurance.

Cyber insurance operates similarly to other insurances regarding involved parties and claims. Many insurance companies offering commercial and product liability insurance also offer cyber liability insurance, despite it being relatively new. Cybersecurity Insurance falls under error and omission insurance provided by insurers.

Most cybersecurity insurances cover both first-party and third-party damages. First-party losses involve direct financial and data losses to a company. In contrast, third-party damages harm customers or the public.

Cyber insurance covers losses caused by unexpected online attacks and data breaches. It also includes the cost of data restoration and extortion. However, the exact coverage may vary for each insurance. It is advisable to consult an expert on the matter before purchasing the insurance.

Here are the costs and types of cyber crimes that general cyber insurance covers:

•   Fulfilling extortions demanded in a ransomware attack.
•   Informing customers in the event if a security breach.
•   Settling legal expenses imposed because of privacy breaches.
•   Employing computer forensics specialists to restore crucial customer information.
•   Initiate the repair of customer identities exposed by cyberattacks.
•   Actively retrieve data that someone has controlled or stolen.
•   Repair or replace compromised or damaged computer systems.
•   Costs incurred in repairing components damaged because of the attack.

Cyber insurance policies cover major internet-based threats. However, they often exclude elements resulting from human negligence, intentional actions, or avoidable issues.

•  Lack of security - The insurance doesn't cover costs if an organization neglects to secure its data with a proper configuration system
•  Human error - In case of an attack, the policy usually excludes expenses caused by employee negligence or human errors.
•  Insider attacks - Cyber insurance policy excludes responsibility for incidents caused by internal disruption or actions of current/former employees.
•  Technological improvements - The insurance policy does not cover expenses for technology systems enhancements or those unrelated to the attack.
•  Prior vulnerabilities - This includes loss due to known pre-existing flaws within the company's awareness

Cyber insurance calculates a company's risk by considering various factors.

Company's previous experiences, whether company has previously faced any data breach incidents. This can determine the potential risks to a certain extent.

Some companies may also get into the technical details of the operations. Cyber insurance providers' cybersecurity experts assess factors such as the data handled, online security, existing computer systems, and drawbacks.

The company's stakeholders thoroughly examine it to assess the potential risk of cyber crimes against it.

Insurers consider various factors to assess the risk in cyber insurance policies. The industry in which the company operates affects the premium price to a great extent.

The company’s security policies are a significant factor in determining the premium. The insurance company assesses an organization's likelihood of online attacks. This assessment involves examining the organization's configuration structures and security systems. Companies face higher premium costs for cyber security insurance when they are more likely to experience cyberattacks.

Company's previous experiences also play a significant role. Heightened risks resulting from past online attacks can significantly increase your premium costs.

The company takes into account its annual turnover when assessing its cyber insurance needs. If the company has a good profit, it can compensate for much of the losses on its own.

The insurance company evaluates the probability of an organization facing online attacks. They do this by examining the organization's configuration structures and security systems. They also examine PII and PHI reports. They may also examine the company's networks, reputation, and customer relationships.

The claim process of cyber insurance is similar to that of other general insurance:

•   Inform the insurance company as soon as the breach takes place.
•   The insurer will then send a cyber expert to analyse and determine the extent of risk and damages.
•   Both the first party and the insurer engage in a discussion about the details of the attack.
•   The policyholder receives attack details and potential solutions depending on its severity.
•   Based on the policyholder’s choice, the insurer will provide the compensation according to the cyber insurance policy.

At SecureNow, we understand that each business is unique. We aim to offer a personalized and comprehensive cyber insurance policy perfectly tailored to meet your specific needs. Following are the steps to buy cyber insurance at SecureNow:

•   Visit our website - www.securenow.in
•   Select cyber insurance in the type of insurance.
•   Fill out the details form accurately.
•   Choose your industry of operation.
•   You will receive quotes from various insurance companies that match your preferences.
•   Talk to an expert and come to a calculated conclusion about your desired policy.
•   We will get back to you within 24 hours to better understand your needs and help you choose the best policy.

You can renew your cyber insurance both offline and online, For offline buying, you can visit your nearest policy branch. Fill out the form and apply for a renewal. We will provide you with renewal quotes for your consideration. Choose your desired quote and pay the premium.

You can renew your cyber risk insurance policy online through SecureNow. Kindly visit the website and submit your application for renewal. Select from the available quotes as per your preference.

You can speak with our policy experts who will assist in selecting the right policy by understanding your needs. Renew your policy by paying the premium online.