Cyber insurance is often considered expensive, and many believe the likelihood of needing it is quite low. But is that really the case?
You can expect cyber insurance for an SME to cost at least €10,000 per year, with the price increasing significantly for businesses with a turnover exceeding €30 million.
With cyber insurance premiums rising by an average of 20 to 25% annually, it’s only natural for entrepreneurs to question whether the investment is truly worth it.
What guarantees do I have when my company chooses reliable security solutions and expertise?
Unfortunately, the answer is none. While this may not be what you want to hear, it’s the reality of the situation.
Think of it this way: can installing smoke detectors completely prevent your house from catching fire? Certainly not!
Similarly, can having fire insurance eliminate the risk of a fire? No, it cannot.
The preventive measures you take—such as installing smoke detectors—serve to reduce the risk of fire and minimize potential damage. The same principle applies to cybersecurity: by equipping yourself with the best possible defenses, you can lower the chances of data breaches or cyber threats. In essence, the defenses enhance your security, but they do not offer absolute guarantees.
Interestingly, the risk of fire damage is significantly lower than the risk of damage from a cyber incident. ***
Yet, fire insurance is legally required, whereas cyber insurance is not.
Who is cyber insurance for?
It’s estimated that over 50% of large companies in Belgium have cyber insurance, while this is only about 20% for SMEs.
However, obtaining insurance is both pointless and impractical if you haven’t implemented preventive organizational and technological measures. If you have a documented cybersecurity strategy in place, securing insurance is advisable; it provides peace of mind knowing that your business is covered against significant risks. An insurer that offers financial and legal support, along with technical services and PR assistance during a crisis, can be a vital lifeline for your company.
What does cyber insurance cover?
Insurance policies often come with lots of fine print, so it’s essential to request multiple proposals to accurately compare coverage options.
The following list highlights key elements worth examining before purchasing your policy:
- Consequences of a Hack or Data Breach: Coverage includes financial losses resulting from system downtime, which can lead to significant revenue loss.
- Investigation Costs: The insurance reimburses expenses related to investigating the breach, including costs for assessing stolen or lost data, identifying the causes, and addressing the aftermath of an attack.
- Communication Support: Insurers often provide assistance in communicating the breach or attack to affected parties.
- Reputational Damage: In some cases, coverage may extend to the costs associated with reputational harm.
- Ransom Coverage: If negotiations fail during an extortion attempt, the insurance may cover a portion of the ransom in certain situations.
- Legal and Compensation Assistance: As a business, you are responsible for handling customer, partner, and supplier data. Cyber insurance can provide legal support and cover compensation costs arising from privacy breaches.
- Additionally, you’re protected if you inadvertently distribute a virus or malware, or if criminals exploit your logo or proprietary assets for fraudulent purposes.
Points to Consider for Cyber Insurance
- It's important to note that insurance does not cover criminal fines imposed on your organization for failing to adequately secure your infrastructure and data. You cannot insure yourself against violations such as GDPR breaches or damages that were caused intentionally.
- Additionally, cyber insurance can sometimes create a false sense of security; it does not protect you from cybercrime. Therefore, it’s crucial to prioritize necessary measures to prevent a hack in the first place.
*Please note that AXS Guard does not sell insurance.
***Based on figures from the Netherlands. Sources:
https://www.inzaken.nl/de-kans-op-brand-is-1-op-261-cybercrime-1-op-8/
https://www.rabobank.nl/bedrijven/verzekeren/verzekeringsnieuws/bescherm-je-tegen-cyberincidenten
Cyber Insurance: Is It Worth Consideration?