Hacker attacks often result in immense financial losses. In some cases, it therefore makes sense to take out cyber insurance in advance. This article will tell you everything you need to know about the concept of cyber insurance, who needs it and what to look out for when taking it out.
Cyber insurance is a policy that protects companies or individuals against financial losses and liability claims resulting from hacking attacks, data breaches and other digital risks. Examples of risks covered include managing a ransomware attack, responding to phishing incidents, defending against DDoS attacks and managing data breaches. Cyber insurance typically covers a wide range of costs, including the costs of responding to the incident, paying ransoms in the case of ransomware attacks, recovering data and providing support in legal matters. The insurance can also cover the loss of revenue during a business interruption.
Cyber insurance is by no means limited to large corporations. Today, virtually any company, regardless of size or industry, can benefit from cyber insurance. The damage caused by IT security incidents has now far exceeded the extent of environmental damage caused by water, storms and lightning strikes, reports Aaron Hartel, commercial director of Trufflepig Forensics. However, while companies are of course insured against such natural disasters, they often overlook the potentially catastrophic effects of hacker attacks. The common assumption that one"s own IT security is more robust than that of other companies can be a dangerous self-deception. While security incidents are increasingly being heard about, many believe that they will not be affected themselves. Reality shows, however, that no one is immune to hacker attacks. In short, cyber insurance is versatile and can be beneficial for a wide range of players and industries. Whether you run a small business, work in IT, work in healthcare, or just want to protect your personal online security, cyber insurance can – under the right conditions – make a crucial difference in the event of a hacker attack.
Before you take out such insurance, however, you should be aware of the challenges involved and possible tricks used by providers. Evaluation questionnaires used by insurers to assess a company"s IT security do not always reflect all the necessary security aspects. Instead, they often focus on unusual security measures that are not necessarily part of a company"s standard repertoire. One example is two-factor authentication (2FA) for external access, whether for VPN connections to the company network or logging into Office 365. Many cyber insurance policies now require that such access be secured with 2FA, but this requirement is often no longer found in the main questionnaires of the insurers. Instead, it is often hidden in the small print of the insurance contracts or reference is made to the need to comply with the latest security recommendations or IT baseline protection. It is therefore crucial to read the small print carefully and ensure that your organization meets the required security standards. Investing in such security measures may prove crucial when it comes down to it, otherwise the insurance company may refuse to settle a claim. Careful IT consultancy may therefore be useful when preparing for such a policy. Some insurers recommend their in-house IT consultancy teams or subsidiaries, but conflicts of interest can arise here, as these teams are, of course, acting on behalf of the insurance company. It is therefore often advisable to find an independent service provider that you trust and that can help you strategically increase your IT security level.
The cost of cyber insurance can vary greatly and depends on various factors such as the scope of coverage, security measures, industry and company size. The cost of cyber insurance should always be considered in relation to the potential cost of a cyber attack. A well-designed cyber insurance policy can protect your business from significant financial losses and reputational damage caused by security incidents. It is therefore an investment in securing your company"s future.
If you are looking for a cost-effective cyber insurance offer, you should be aware that an appropriate level of IT security is crucial. Insurance companies have a strong interest in ensuring that the damage caused by a cyber attack is as low as possible and that the risk of a claim is minimized overall. The most important step in ensuring that you receive an attractive offer from an insurance company is to implement basic security measures. These include measures such as two-factor authentication, solid backup strategies, the existence of an incident response plan, the implementation of a zero-trust policy, and the implementation of detection mechanisms such as a connection to a security operations center (SOC). It is also crucial that you not only ensure compliance with standards, but also keep an eye on the specific requirements of the insurance policy. Only by implementing a comprehensive security strategy and being willing to continuously adapt to new requirements can you ensure that your company is optimally protected against the risks of the digital world and can simultaneously obtain cost-effective cyber insurance offers.
Despite all the advantages, cyber insurance does not offer absolute certainty. It is no substitute for proactive security measures and does not reduce the risk of becoming a victim of a hacker attack. In addition, most cyber insurance policies include deductibles and coverage limits. This means that you may have to bear some of the costs yourself in the event of a claim and that the coverage limit is not unlimited. It is important to be aware of these risks and limitations before taking out the insurance.
Although cyber insurance is an additional cost factor, it is also a crucial tool for protecting against the financial consequences of digital threats. It is a valuable instrument for minimizing the financial and operational consequences of cyber attacks and ensuring business continuity in the event of an incident.
