Cyber protection isn't new, but the recent cyber attacks on the Colonial Pipeline and the world's largest meat company have brought cybersecurity concerns back to the headlines.
What is happening in the insurance space
The industry has seen an increased interest in cybersecurity insurance, which started when the pandemic hit, but definitely grew with the recent attacks. With that, more experts are entering this space, which makes cyber insurance more accessible now than ever. Insurance companies want to see more information about businesses before making the decision to insure them. Certain sectors where more risks are perceived, such as healthcare, are also seeing higher policy prices.
The legal space trends
The market has really expanded and the availability of law firms that are taking on these kinds of matters has increased. Lawyers are becoming more well-versed on what types of risks are posed to businesses and how cybersecurity risks are being integrated on an overall risk management strategy.
Things you need to be aware of regarding policies
Be aware of lower sub limits of cyber insurance, which can sometimes give businesses the wrong idea that their costs will be covered in case of an incident. The reality is that lower coverage will be exhausted very quickly. Businesses need to consider how to adequately protect their cyber risks by selecting a robust policy more likely to cover them.
The difference between policies
The first party liability policy is what protects you. It also provides business income interruptions, extra expenses to replace computers that are destroyed in case of a ransomware, and funds transfer fraud, for example. The third party liability side covers the data breach notifications of the liability associated with third party access to information.
A typical robust cybersecurity policy that most carriers have available covers infringement or defamation; PCI and credit card processing fines and assessments; and regulatory fines and penalties.
How to effectively respond to a cyber incident
Have a written cyber response policy. The time to figure out who you're supposed to call first or what to do is not when you have an incident unfolding. Have a strategy. Early reporting is essential in all insurance claims.
Be careful touching your network after a cyber incident, it's important to avoid more damages after you've been attacked. From a legal stand point, you could potentially spoil or destroy evidence, making it harder for forensic investigators to track how the breach happened. You might need that evidence down the line to protect yourself in a law suit or if you decide to sue the provider who breached your information.
Should you pay when you get hit?
That's a decision you're going to have to make when an incident occurs in consultation with forensic investigators. It comes down to a professional judgment made at the time by cybersecurity professionals, attorneys and the customer whether or not they think the criminal is "trustworthy", meaning they know if they get paid and they don't unlock your system that people will stop paying them.
Also take into consideration how valuable the data is and if you have adequate backups.
What does the future look like
It's just a matter of time before regulation permeates down to probably all industries to take better cybersecurity posture. Companies who engage in third party business contracts with network access might see an increase in cyber insurance requirements.
Engage in best practices and don't assume you have all the pieces in place. Mitigate and reduce your cyber risks as much as possible by using good IT and contract practices and then look into getting insurance in place before you're required to do it or have a claim.
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