Cyber Insurance protects businesses from various threats which includes cyber threats and data breaches. Cyber Insurance is gaining popularity across businesses. Cyber Insurance covers intangible assets such as digital assets, intellectual properties, customer data as well. The cost involved in these risk types is high and can lead to huge losses to the business. Cyber Insurance plays a crucial role in mitigating risk exposure. It is interesting to note that Businesses are adopting various strategies and investment in the cyber insurance policy is one of them.
Following are the gaps in Coverage:
Non-Inclusion of Various Threats in Cyber Insurance Policies: This is one of the biggest gaps being witnessed in the cyber insurance industry as the insurance providers refrain from covering threats that lead to high cost or damage. To close this gap, it becomes essential for businesses to understand the terms and conditions of the policies offered by cyber insurance providers. Businesses should check for all the possible threats (high and low) in the policies. For example, Many Cyber Insurance providers do not include coverage of ransomware owing to the damage resulted from the same. High costs associated with these threats could also be the potential reason for not including these in the policies.
Similar Cyber Insurance Policies for Every Business: Customization of Cyber Insurance policies as per the requirement of the company is very essential. But this is a common trend being observed that insurance providers usually offer similar policies for every company without understanding their business model. Different companies face different types of threats and policies should be altered as per the possible threats/risks being faced by the companies. This gap can be bridged if the businesses discuss their business model with cyber insurance policy providers. Proper risk profiling must be conducted before taking an insurance policy. For example, companies that collect data in bulk might need unique policies related to data breaches however, other companies might have different requirements.
Lack of Transparency: Most of the businesses do not focus on terms and conditions included in a cyber insurance policy. In many scenarios, many factors are excluded from a cyber-insurance policy such as unencrypted data, Investigation Cost and others. If businesses do not carefully review the exclusions within a policy, organizations might have to face claim rejections. Rejections in claims could be a huge loss for the organizations.
Inaccurate Estimation of Assured Amount: Inaccurate estimation of Assured amount is witnessed among businesses. When large software and service providers are exposed to data breaches and similar events, it could affect businesses. The damages and losses that occurred in this scenario are huge and can impact the entire business. In some cases, losses might be higher than the assured amount. In such situations, companies can not claim more than the assured amount to recover their damages.