Why is Cyber Insurance becoming increasingly important?
Updated: Oct 29, 2021
How Cyber Insurance Protects Your Business
Due to the recent increase in data breaches and ransomware attacks, businesses need to ensure that their organization is correctly protected with the appropriate cyber insurance coverage. Improving cyber security is vital due to the increased risk of conducting business in the digital age. The growing importance and reliance on the internet have led to an increase in cybercrime activities. The anonymity, convenience, and constant increase in speed provided by the internet makes cybercrime easier to carry out today than ever before. The more breaches that companies suffer, the more likely they fall victim to a cybercrime attack. Once a system has been compromised, hackers can impersonate employees and send out wire transfer instructions. As a result, there has been extensive business disruption and loss, with several companies’ reputations being put at risk.
As businesses and consumers begin to become more aware of the risk of cybercrime, the demand for cyber insurance has also started to grow. At AM RE, we utilize our primary SME cyber underwriting expertise and longstanding relationships with MGAs to offer best-in-class support for cyber-SME insurance products.
What is Cybercrime?
Cybercrime is a broad term comprised of various types of crime that take place online or using technology. It is one of the fastest-growing criminal activities across the world and can affect both individuals and businesses.
Cybercrimes are committed by cybercriminals or hackers attempting to profit from duping an individual or organization. Occasionally hackers may also target computer systems for non-monetary reasons, personal or political, or simply opportunistic to test a company’s weak spots within their IT infrastructure. However, this is still illegal and can damage the reputation of the targeted company.
One of the most common forms of cybercrime involves targeting your computer system with a virus or a similar type of malware to obtain unauthorized access. The malware (or ransomware) can encrypt systems and sometimes suspend all functions within a computer system altogether. Alternatively, malware may also steal or delete data from your device. Several other areas fall under cybercrime, ranging from traditional offences to more severe crimes regarding computers and information systems, including:
Identity theft or fraud - this is often carried out through phishing attacks and can also result in fraudulent wire transfers
Theft of corporate data - hacking computer information systems to steal sensitive information
Cyber Extortion – demanding money to prevent data theft or encryption
Ransomware attacks – holding private information and locking out users from systems for ransom
The reach of the internet is ever-growing and constantly changing, and with that comes new ways in which people can commit these cybercrimes. To control the damage that cybercrime causes, there have been several solutions put in place that protect against increases in cyber liability.
Solutions for Cyber Risks
Cyber insurance and reinsurance policies can help cover the cost of ransom payments, funds transfer fraud, telephone hacking, identify theft and social engineering attacks, thus ensuring minimal financial and reputational damage.
At AM RE, we work as a reinsurance intermediary offering Property Casualty treaty reinsurance traditionally using a Quota Share model. We are here to help support our clients in the event of cybercrime with specialist reinsurance.
We offer coverage for SME organizations within first and third-party data breaches, cybercrime, extortion, system damage, media liability and business interruption. We work closely with claims adjusters and incident response specialists to gain insight into multiple risk portfolios. As capacity tightens within the cyber market, we recognize that alternative solutions are required. AM RE can provide a tailored and detailed approach to this class of business, supporting the portfolios of our insurance partners.