Friday, June 9, 2023

Should Companies Invest in a Cyber Insurance Policy?

Is cyber insurance a necessity? What industries need it the most? Discover what IT experts have to say about cyber insurance, IT security, and related topics.  

While cyber insurance is growing increasingly common, many companies are opting to forgo it for one reason or another. Some may feel that they don’t have the funds available to cover cyber insurance costs; others may feel that a stellar cybersecurity strategy negates the need for cyber insurance coverage, while still others may be under the mistaken impression that they are safe because their businesses are too small or unimportant for hackers to notice.

Are you wondering if you should invest in cyber insurance for your business? If so, take a look at what the experts have to say on the topic.

You Need Cyber Insurance

Most experts agree that company owners should take out a cyber insurance policy. Nick Allo from Semtech IT Solutions in Central Florida notes that his own company has cyber insurance and that it’s a must-have for businesses in his industry. Ian Brady from Steadfast Solutions in Melbourne, Australia, accurately points out that some industries are targeted by cybercriminals more frequently than others. Some at-risk industries that should seriously consider purchasing a cyber-insurance policy include:

  • Real estate agents. Real estate agents manage and transfer large sums of money on a regular basis and so are a prime target for cybercriminals
  • Accounting/Finance companies. These companies not only handle large sums of money but also possess a lot of valuable personal information.
  • Law firms. Law firms possess a treasure trove of personal data that cybercriminals can use for a number of nefarious purposes.
  • Healthcare/Medical companies and facilities. Hospitals, clinics, and other medical facilities are prime targets for cyberhackers who are interested in getting their hands on large volumes of personal and financial information. The healthcare industry has also been targeted by ransomware as hackers know that healthcare facilities may be willing to pay large sums of money to get invaluable data back. Given these facts, it’s not surprising that healthcare facilities are more likely to have cyber insurance than companies in any other industry.
  • Educational facilities. Schools, colleges and universities are common targets for hackers who are either after personal and financial information or ransom from a ransomware attack. Sadly, many educational facilities don’t have strong cybersecurity protocols to protect themselves, leaving faculty members, children, and parents at risk of having their information breached and misused.

Cyber insurance Isn’t the “All in All”

Cyber insurance can provide you with the finances you need to get back on your feet after an attack, but it won’t restore your reputation or bring back clients who may feel that you are at fault for the breach. As Ian Brady points out, the damage caused to a company’s reputation as a result of a breach often exceeds the monetary cost of the breach. Recent stats show that Mr. Brady’s assertation is right, as recent stats show that 86% of consumers won’t do business with a company that has suffered a data breach involving credit or debit cards.

Keith Marchiano, the Vice-President of Information and Communications Technology at Kyocera Intelligence Mid-Atlantic, an IT MSP based in the Northeastern United States, warns that cyber insurance must go hand in hand with proper IT management. Poor IT management not only puts your company at risk of a malware attack but could also give your cyber insurance company a reason to deny your firm compensation when such an attack occurs.

It’s also important to be aware that poor IT management isn’t the only reason insurance companies give for denying compensation claims. Ilan Sredni from Palindrome Consulting in Hollywood, Florida, reports that a number of cyber insurance companies are denying compensation for attacks that can be traced back to state-sponsored organizations in foreign countries. Cyber insurance companies are calling attacks from such organizations “acts of war” rather than regular cyberattacks in an attempt to avoid having to pay out money to cyberattack victims.

Now What?

As Ilan Sredni states, businesses should invest more in cybersecurity than in cyber insurance. While cyber insurance can help a company deal with the aftermath of an attack, it’s far better for a business owner to do everything in his or her power to prevent such an attack from happening in the first place. At the same time, even companies with great cybersecurity can be breached, as hackers are continually innovating and creating new attack strategies and malware programs. Cyber insurance is a must for any company that is at risk of losing large sums of money as a result of a cyberattack.

Do you know who to turn to for a good cyber insurance policy? Do careful research to make sure your chosen company offers affordable policies without multiple pre-conditions. It’s also smart to consult an IT managed service provider to not only improve your IT security but also get a referral to a trustworthy cyber insurance provider. While it may take some time, research, and effort to find a policy that suits your needs and budget, the hard work is more than worth it.

Andy Debolt
Andy is a graduate of the University of Minnesota with a Bachelors Degree in Journalism. When he isn't writing Andy enjoys water sports and spending time on the golf course.


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