Cybersecurity insurance has come to become one of the ways modern organizations are using to combat cyberattacks. The idea behind cybersecurity insurance from both the insured and the insurer is how to effectively checkmate the escalating incidents of cyber breaches.
It's, therefore, a mutually symbiotic relationship between the two parties since both of them should ordinarily be on the same page as regards the cybersecurity insurance business. The expectation would be that the insurance carrier will not like to pay out as a result of a breach, while the insured will also not want to experience the ugly incidents usually associated with any form of breach.
Any incident of a data breach can seriously damage your organization's reputation and make it susceptible to incredibly expensive fines. A solid cybersecurity insurance policy will, therefore, help you to deal with the unforeseen emergencies that originate from cyberspace on a regular basis.
Cybersecurity insurance coverage will go a long way in helping to offset data breach expenses that arise as a result of notification methods, attendant forensics investigations, statutory charges, information reports, credit monitoring, reputation restoration services, regulatory penalties, and legal payouts.
The National Association of Insurance Commissioners (NAIC) reported that based on the 2018 calendar year results, approximately 500 insurers have provided businesses and individuals with cybersecurity insurance, with 96%of the insurers writing cybersecurity insurance as part of a package policy. While this report should be heartwarming for any organization that has been previously bogged down by cybersecurity or privacy-related issues, it may prove suicidal if you decide to rely solely on such insurance when a breach occurs.
At best, you should have a cybersecurity insurance policy to complement reliable information security policies and practices. Cybersecurity insurance has not yet developed to the extent of covering all events and actions, and you should, therefore have a comprehensive information security program in place, in order to cover up the potential lapses and fully harness the advantages cybersecurity insurance promises.
The following are four of such lapses:
1. Shortcomings on coverage
Policies come with a lot of variations. What you get from one may not be what another will cover. As a case in point, the breach you may experience in your organization may be from the activities of a vendor, such as a cloud provider who in this case is a third-party service provider.
Going by what obtains in the health-care sector, the data owners - hospitals - are often adjudged liable for any breach of protected health-related data emanating from their business partners. In the U.S. for instance, organizations that suffer data breaches in their branches in different states have to go through different notification laws as these states have their different legislative bodies that come up with these laws.
Expectedly, the company will want to provide the same notice to all affected individuals, the insurance carrier, on the other hand, will want to capitalize on this "undue" advantage to save the cost of notification, given that it's not legally required in such a state.
Another important aspect you need to take into cognizance is the provision for the source of a breach. Some policies will only cover technically-based attacks, such as the destruction of a computing device or unapproved admittance to an organization's systems.
You also need to be abreast of potentially hidden factors that may have an impact on your policy, these may necessarily include the types and amounts of fines or penalties levied or other actions by regulators that affect the consequence of a cyberattack.
2. A false sense of security
The fact that you have a cybersecurity insurance coverage does not mean that all is well, this will boil down to the Peltzman effect. Concerted efforts must be made in order not to create a false sense of cybersecurity awareness.
There is every chance that once your employees know that you have a cybersecurity insurance policy in place, they will develop a lackadaisical attitude towards cybersecurity in the company. The necessary awareness will be short-changed and a risky approach to following cybersecurity standards will become the order of the day.
A false sense that all is well even if an attack occurs will take over the whole system.
3. Cybersecurity insurance does not mean data protection
Even where you have the most comprehensive cyber coverage, you are still susceptible to attacks. This then means that you must do everything to improve your internal privacy and security measures.
Overwhelmingly, prevention is still the best form of insurance against a cyberattack.
You must regularly and consciously assess your privacy and security risks and then take actions to mitigate the beckoning lapses.
You can't afford to embark on some half measures in your security standards such as VPN trials that may even come with a 30-day money-back guarantee if you aren't completely satisfied, with the false belief that you are in safe hands.
4. Security vendors
Knowing that you can't just pick any security vendor of your choice is an indicator that you are not absolutely in control of your affairs and this should be a red flag signaling you as to the extent of dependence you may repose in a cybersecurity insurance company. The cybersecurity insurance company only picks its preferred information security vendors to use in the case of a cybersecurity attack or data breach.
What this portends is that the cybersecurity insurance company may only let you use the third-party organizations of its choosing when it comes to the time for post-breach digital forensics and legal advice.
In order to ensure that you are head above water as regards your cybersecurity, you must make sure that all departments, from IT to human resources, evolve and constantly review their "Incident Response Plan." This plan must make provisions for an effective, cost-efficient means of helping your organization to meet statutory obligations and develop blueprints that are in accordance with data breach incidents best practices.
