In January 2024, India’s popular mobile payment platform, MobiKwik, reportedly experienced a significant data breach that compromised the personal information of over 3.5 million users. This breach rocked the nation and proved the importance of good cyber security. MobiKwik initially refuted the claim, but the possibility of compromised names, phone numbers, email addresses, and credit card numbers further demonstrated the increasing insecurities even among the more prominent digital services. Wow, that was a real eye-opener on the hackers vs. corporations of today.
Since it seems that every company is going paperless, the danger of cyber attacks is not something that lies in the far future but is a common event. That’s where cyber insurance enters the scene, providing businesses with a means of offsetting the financial losses that cyber incidents can cause. However, like all insurance, a cyber insurance policy is only as good as the paper it’s printed on in its terms and conditions. It is imperative to know these things to ensure your business is fully covered when the time comes.
What is Cyber Insurance?
That’s like cyber insurance, or as some people call it, cybersecurity insurance or cyber liability insurance, which covers the financial losses sustained from a cyber attack. These policies can pay for everything from lawyers and public relations experts to data recovery specialists and losses due to business interruption.
However, cyber insurance is not a one-size-fits-all solution. Each policy is tailored to fit the specific needs of the company, and the amount of coverage can vary widely depending on the nature of the business, its size, and the type of data that it handles. This is why firms need to read the fine print on their cyber insurance policy.
Key Terms and Conditions to Watch Out For
1. Coverage Limits
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- Explanation: Your insurance company has a set limit on how much it will pay out on a claim. However, the most important thing is ensuring the coverage limit is high enough to compensate for losses.
- Example: If a data breach occurs, expenses rise rapidly above the estimated amount, including the cost of lawyers, informing those affected, and possible lawsuits.
2. Exclusions
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- Explanation: Exclusions are certain events or damages the policy will not cover. In a cyber insurance policy, some general exclusions are acts of war, pre existing conditions, and insider threats.
- Example: In 2021, a European company found out the hard way that its insurance policy did not cover inside jobs when a bitter employee leaked some data and ended up having to pay millions of euros out of pocket.
3. Retroactive Coverage
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- Explanation: This term refers to whether the policy covers incidents that occurred before the policy’s start date. Any company that could have been compromised and never even knew it should have backdating coverage.
- Example: A medical provider was sued in 2022 because the patients’ information was hacked, and the breach occurred before the effective date of the cyber insurance coverage. They had to pay all the legal fees because they didn’t have retroactive coverage.
4. Third-Party Liability
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- Explanation: Most cyber insurance policies also cover third-party liability, which is coverage for claims made by customers or partners regarding a cyber incident at your business.
- Example: In 2022, a retail company was sued because of a cyber attack that exposed customers’ payment information. The “vicarious liability” portion of their cyber insurance policy covered the legal settlements.
5. Notification Requirements
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- Explanation: Almost all cyber policies require very stringent notice requirements to the insurer in the event of a cyber incident. If these requirements are not met, the claim can be denied.
- Example: A British company lost its insurance claim because it failed to report the data breach to its insurance company as soon as possible, as its policy states. This delay caused more damages that the insurance would not pay for.
The Claims Process – What to Expect
The claims process for cyber insurance is extremely cumbersome and lengthy. If you understand the process, you will be able to ensure that your claim goes through without any problems and that you get the money you are entitled to.
1. Immediate Incident Reporting
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- Explanation: The first step to filing a claim is to immediately notify your insurance company of the cyber incident. Most policies require notification within a specific timeframe, often 24-48 hours.
- Example: In 2023, a financial services firm successfully claimed cyber insurance after promptly reporting a phishing attack that compromised client accounts. They moved so quickly that the insurance company could respond immediately and try to minimize the damage.
2. Documentation and Evidence Gathering
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- Explanation: You report it and then have to prove it with all of the papers and whatnot related to the violation. This includes logs, emails, and any other relevant information.
- Example: A manufacturer out of India was able to speed up the process by having extensive documentation of the ransomware attack, including a timeline of events and correspondence with the attackers.
3. Working with Cybersecurity Experts
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- Explanation: Many cyber insurance policies include provisions for working with cybersecurity experts provided by the insurer. These guys are to regulate the leak and determine its cause.
- Example: After the 2022 break-in, they had all these cyber security experts (through their insurance company) come in and try to figure out how the break-in had happened and how to prevent it from happening again.
4. Settlement and Payout
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- Explanation: After the investigation, the insurance company will determine, according to the policy, how much money it will pay out. That would include data recovery costs, legal fees, and loss of business.
- Example: One example is a retail chain in Mumbai that was paid off after a cyber attack left them out of commission for several days. The payment consisted of reimbursement for lost business and the cost of restoring their systems.
Understanding Policy Renewals and Updates
With cyber threats constantly evolving, so should your cyber insurance coverage. Regularly reviewing and updating your policy ensures it aligns with your business’s risk profile.
- Annual Policy Review
- Explanation: Your cyber insurance policy must be reviewed annually to account for any changes in your business operations, such as new technologies or expanded services.
- Example: A growing e-commerce company from India just got their cyber insurance policy amended to reflect a change in their data processing and a change in the location of their customers, so they avoided potential holes in their coverage.
- Policy Endorsements
- Explanation: Endorsements are like riders that are added to an existing policy, either providing additional coverage or altering the original terms. These can be crucial when your business is growing and taking bigger risks.
- Example: After expanding into new markets, an Indian fintech startup added endorsements to their cyber insurance policy to cover additional regulatory requirements in those regions.
- Understanding the Renewal Process
- Explanation: The renewal process is an opportunity to negotiate better terms or increase your coverage. It’s also a time to reevaluate your risk and, if necessary, make some changes.
- Example: A global IT services firm successfully negotiated lower premiums and expanded coverage by demonstrating its improved cybersecurity posture during the policy renewal process.
The Future of Cyber Insurance – What Lies Ahead
As cyber threats become more sophisticated, so does the world of cyber insurance. They want people to keep themselves updated on the new frontier, cyber insurance, so they don’t lose that security.
- Emerging Risks
- Explanation: New forms of cyber-threats, like AI-based attacks and deepfakes, are emerging, and insurance companies are changing their coverage to compensate for these dangers.
- Example: A 2024 report highlighted how some insurers are beginning to offer coverage for AI-driven fraud, a growing concern in the financial sector.
- Regulatory Changes
- Explanation: All governments are cracking down on data protection and cyber security. This is changing the nature of cyber insurance policies, so it is extremely important that businesses keep themselves compliant.
- Example: The introduction of India’s Data Protection Bill in 2023 led to a surge in demand for cyber insurance policies that cover regulatory fines and penalties.
- Increased Focus on Risk Management
- Explanation: Insurance companies are increasingly insisting that companies have very strong cyber security measures in place before they can be covered. This does illustrate the importance of risk management, however.
- Example: An Indian conglomerate secured a more favorable cyber insurance policy by demonstrating its investment in advanced cybersecurity technologies and employee training programs.
Quick Read: The Importance of Cyber Insurance for Modern Businesses.
Conclusion: The Role of Mitigata in Your Cybersecurity Strategy
It can be confusing to understand all the fine print of cyber insurance, but in this day and age, it is necessary to make sure that your business is completely covered. We at Mitigata know that businesses struggle to obtain complete cyber insurance. That’s why we offer personalized methods to help you quantify and control your financial risk through data-based examination.
Mitigata is not only an insurance company but a partner in your cybersecurity resilience. Our team of professionals will work with you to identify your individual risks and help you choose the appropriate coverage to suit your situation. Whether it is a data breach, ransomware infection, or regulatory compliance issues, Mitigata will be alongside you at each step.
Protect Your Business Today
Not after some cyber attack impedes your ability to function. Call Mitigata right now to find out how we can help you get the most comprehensive cyber insurance coverage possible to secure your business’s future. Visit our website to get started, or call and talk to one of our reps for a personalized evaluation.
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