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17.05.2017
2604
The large-scale hacker attacks on May 12 using the WanaCrypt0r 2.0 malware once again showed why cyber insurance has become widespread on the international market in recent years.
Today, cyber insurance programs are already offered by more than 60 insurance companies in the world, writes NEP magazine. The main task of cyber insurance is protection against large-scale hacker attacks.
This type of insurance provides a financial recovery mechanism after major losses, helping the company return to work, maintain stability, and reduce losses due to interruptions in production. The insured amount can compensate for losses and expenses aimed at restoring the personal data base and investigating the incident.
The annual amount of paid cyber insurance premiums in the world today is $2.5-3 billion, and experts believe that by 2020 their amount will reach $75-10 billion. At the same time, 90% of revenues came from American companies: in the USA this type of insurance is the fastest growing insurance product.
As reported by Forinsurer, companies' expenses for cyber insurance in the USA increased by 90% in 2016. Cyber insurance is becoming one of the most important elements of modern business - in 2016, manufacturers in the USA paid $36.9 million for cyber insurance. This is 89% more than a year earlier. Cyberattacks can be very destructive for companies in any industry, and businesses cannot afford to ignore them.
However, for many, cyber insurance is still Terra Incognita. Many corporate clients do not fully understand what risks they are protecting themselves against. According to a study of insurance claims conducted by NetDiligence in 2015, 48% of respondents admitted that they have little understanding of cyber risks.
Working with insurance companies is also difficult to predict in what form, on what scale and when a cyber threat will appear and how these threats will affect the amount of insurance payments. One of the challenges insurers face is that they are forced to work in an uncharted territory.
The WanaCry hacking virus, which paralyzed computer systems of organizations and institutions in more than 150 countries around the world, has continued to spread in Asian countries. The ransomware has locked at least 200,000 computers. WanaCry encrypts user files, making them unusable. To unlock them, a ransom of $200 to $600 in Bitcoins is demanded. The creators of the virus have already received more than $42 thousand from their victims.
Cyber risks are difficult to define, and it is also difficult to try to predict them; the situation is further complicated by the general reluctance of companies to report leaks and security breaches when they are discovered, in particular, due to fears of damaging their reputation. Therefore, at the underwriting stage (assessment of risks accepted for insurance), insurance companies try to determine the insurance rate and establish insurance conditions. Specialists study how information security issues are resolved in the company, how data is stored, whether the company tests information security systems, etc. Most often, insurance companies focus only on those risks with which they are familiar.
Nevertheless, cyber insurance is characterized by a wide range of coverage and protects companies from financial losses as a result of DDoS attacks, phishing, cyber extortion, malware infection, etc. And, importantly, insurance companies offer reimbursement for the costs of investigating a cyber crime, anti-crisis PR to restore reputation, costs of defense in court and restoration of IT systems.
The cyber insurance market may become one of the most promising in the next 10 years. The growth of the global cyber insurance market is from 25 to 50%. For many years, cyber insurance was mostly used by retail businesses, financial service providers and hospitals. These measures were mainly taken to protect customer information from theft.
Source: Forinsurer
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