According to a 2019 Verizon research, small businesses were directly targeted in 43 percent of all successful information network breaches. Because of the severe repercussions of these attacks on enterprises, cyber insurance has become a necessary reaction. It's crucial to remember that even if your cybersecurity systems are up to par, an attack could still succeed.

Cyberattacks have grown to be one of the most serious risks to small and medium-sized organizations. Instead of larger corporations with superior IT security systems, hackers and bad actors are increasingly targeting these organizations.

The Cyber Insurance Industry's Ascension

While network and security specialists aim to keep one step ahead of thieves, cyber insurance has become an important part of any company's disaster recovery strategy. According to an NBC investigation, a single successful attack costs a company $200,000 on average. Small firms may not be able to recoup from such a loss.

With cyber insurance, the company is financially protected in the event of a successful assault. More insurers are now include a cybersecurity component in their technology policies. Cyber-attacks have surpassed natural disasters as the second most serious threat to global enterprises. As a result, the business is expanding, with over 520 insurance companies reporting that they underwrote cyber-related policies in 2018. The shift in focus to smaller firms happened swiftly. As additional attacks were successful, criminals realized that going after the lowest hanging fruit is preferable to launching a long-term attack on a huge, international corporation. Cyber premiums are expected to reach $20 billion per year by 2025, according to projections.

Cyber insurance policies come in a variety of shapes and sizes.

Different vendors offer various types of protection. Today, however, the business is dominated by two distinct policies. Before choosing on which policy will work best for your company, you must first evaluate your actual risk exposure.

Third-Party Insurance Policies

A third-party policy protects you from civil claims under new legislation that holds your organization liable for any breach of personal information. This type of insurance can also be included in an IT professional's errors and omissions policy. A third-party cyber insurance coverage will cover your responsibilities if a breach succeeds and your firm is sued.

Policies Adopted by the First Party

As ransomware and other forms of extortion have grown in popularity, businesses have needed to beef up their security. A successful ransomware attack can bring your company to its knees. To lock you out of your IT system, the attacker uses encryption or root access rights. You will only be able to access your information and networks after paying a ransom to the hacker. A first-party cyber insurance policy will cover the sum asked by the hackers, guaranteeing that your company recovers from the attack.