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Protect Your Business against Cyber Risks with Cyber Insurance

cyber risk insurance broker singapore

As cyber threats become more sophisticated, the need for Cyber Insurance (also known as Cyber Security Insurance) has become more apparent. Cyber Insurance can provide all types of businesses (small, medium or large) with financial protection against damages caused by malicious hackers and malware or due to human errors.

The need for Cyber Insurance is growing as the number of cyber incidents continues to rise. The global average cost of a data breach increased by 2.6% from $4.2million in 2021 to $4.35million last year (2022). Not only do businesses suffer heavy financial losses, but also reputation loss, legal liability, loss of business and consumer trust as a result of data breach.  It is therefore vital for every business to have a robust computer system, incident response plan, software updates and patches etc. to protect them against cyber risk incidents.

In addition, businesses should harness themselves with another layer of protection, which is Cyber Insurance.  Let us now see this insurance product is and the coverage it offers. 

What is Cyber Insurance?

Cyber Insurance is a specialist insurance product designed to protect businesses from financial losses associated with data breaches and other cyber risks. Cyber Insurance typically covers an insured’s own loss (referred to as “First Party Loss”), and Third Party Liability.  First Party Loss essentially covers the following:

  • Recovery/reconstruction costs in respect of lost or damaged data and failed network security
  • Computer forensic firm’s costs in identifying the extent and scope of a cyber incident such as any malicious act against an insured’s computer system, malicious access to or hacking of the computer system, introduction of malicious code, virus, worms etc., and denial of service attacks
  • Legal fees to respond to any regulatory inquiries pertaining to violation of privacy laws, and also to advise on legal liability to third parties
  • Notification costs that will be incurred in notifying individuals whose personal data has been wrongfully disclosed, and also costs in respect of credit monitoring and identity theft monitoring services for those individuals
  • Business interruption loss
  • Cyber extortion

Third Party Liability will cover damages plus costs and expenses claimed by any third party whose personal data has been compromised, and also the insured’s own defence/settlement costs.  Coverage is also provided for legal representation at any regulatory/governmental inquiry in respect of breach of personal data laws.

The policy can also provide cover against Medial Liability that may arise from your website contents e.g. infringement of intellectual property rights, defamation, plagiarism, piracy or misappropriation of ideas.  Damages plus costs and expenses claimed by an injured third party, and the insured’s own defence/settlement costs are covered.

Benefits of Cyber Insurance

The primary benefit of Cyber Insurance is the financial protection it provides businesses as mentioned above.  The policy extends to cover costs to fix security breaches, identity theft protection, and protection against third party legal action.  Income lost during interruption to business caused by a cyber-attack will be reimbursed.

The policy also helps the insured to recoup any losses incurred as a result of cyber extortion.  Legal assistance will be required after a cyber attack, which can be costly.  The policy affords proper legal help after a cyber attack.  In addition, businesses can have the benefit of access to cyber security experts, who can assess their computer systems and advise on any enhancement to be made to ensure their systems are robust..

Cyber Risk Insurance can also help businesses build trust with their customers by demonstrating their commitment to data security. Customers are more likely to trust and deal with businesses that have taken the necessary steps to protect their data.

How Much Does Cyber Risk Insurance Cost?

The cost of Cyber Insurance varies depending on a number of factors which include the following:

  • Type of industry and size
  • Robustness of the computer system security
  • Security practices such as:
  • the presence of incident response plan
  • data encryption practices
  • password management policies
  • digital media back-up
  • software updates and patches
  • antivirus protection
  • firewalls
  • Type and level of coverage
  • Policy excess chosen

Conclusion

The need for Cyber Insurance is increasingly gaining importance as cyber threats are becoming more sophisticated and costly.  While  Cyber Insurance policies are not a replacement for strong cyber security measures, they certainly serve as an effective risk management tool.

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