Cyber Insurance
Cyber risk is a growing concern for institutions, individuals, and financial markets. In less than five years, it has surged to the top position in the list of global risks for business. The increasing number of cyber incidents, the continued digital transformation, and new regulatory initiatives are all expected to raise awareness and boost the demand for cyber insurance.
What does it cover?
Cyber insurance, like most insurance products, generally distinguishes between two broad loss categories, “first party” and “third party”. First-party losses relate to those directly suffered by the insured (i.e. the “first” party to the insurance contract), while third-party liability relates to claims brought by parties external to the contract (i.e. the “third” party) who suffer a loss allegedly due to the insured’s conduct.
First Party coverage.
First-party coverage includes losses incurred directly by the insured. For example, costs related to investigating the cause of a data breach or security incident, costs associated with restoring business services, the cost of notifying affected individuals, credit monitoring services, costs incurred from public relations and media services in order to communicate the event, extortion, and ransom payments, and losses associated with a business interruption.
Third-Party Liability coverage.
Third-party liability covers the cost of defending against public or private litigation, settlements, judgments, or other rulings, as well as fines, fees, and settlements stemming from these lawsuits.
Cyber vs Crime Insurance
| Crime | Risk | Cyber |
| x | Data-Based Management expenses | √ |
| x | Legal liability and defense cost | √ |
| x | Regulatory investigation | √ |
| x | Loss of income due to networking interruption. | √ |
| x | Loss of information Assets due to security failure | √ |
| x | Cyber extortion. | √ |
| √ | Fraudulent fund transfer | √ |
| √ | Social Engineering ( leading to loss of funds) | x |
| √ | Employee theft | x |
| √ | Forgery | x |