By: Natasha Meserve
Data breach is the new “it” crime of the modern age. According to CNBC, cybercrime costs the global economy almost $445 billion a year. As more and more businesses transition to online transactions, the need for cyber-insurance becomes more pressing. With businesses struggling to protect their customers’ private information, after seemingly endless stories about cyber attacks, insurance companies that offer cyber-insurance will be gearing up to do a lot of business.
Some examples of data breaches in the recent few years include Facebook in 2013, P.F Changs in 2014, and the massive Target breach that affected over 110 million people. This seemed to get the attention of companies who began to buy cyber-insurance as a defense to massive data breaches that could possibly cripple them. Cyber-insurance has been around for the past ten years according to Computer Weekly, but nobody has really paid much attention to it or bought the insurance.
Risk is an important factor in any business venture, and risk management looks at different ways to cope with the possibilities of such happening. Insuring against the risk is an appropriate way to manage a company’s risk. Cyber-insurance can cover the following: data breach/privacy management, multimedia liability cover, extortion liability cover, and network security liability. The insurance companies look over your proposal and if they’re willing to take on your risks, which is how they calculate the premiums they will charge. Erica Constance of Finex Global says, “No two businesses are the same when it comes to cyber risks, therefore it is key to understand the cyber risks your business faces and to ensure your cyber policy is tailored to mirror those risks.”
Working for one of the largest insurance companies in the United States over the summer, the risk management offer is a lucrative one. Now that cyber-insurance is in demand, businesses and insurance companies can profit greatly. The need to protect the private financial and personal information of customers is crucial to businesses for their long-term effectiveness. From tech, health-care and financial companies buying into the trend, now more retail and manufacturing firms are buying coverage for their companies. I can foresee the trend growing throughout this year and next, as more and more companies move into protecting their online transactions and information. The risk of not having cyber-insurance outweighs the cost, at least according to Clarity, a New York staffing agency. The sales of cyber insurance increased 21 percent, with the sales doubling in 2014 and expected to grow exponentially in the next few years. It seems that this new wave of data breach protection might curtail massive security breaches of the future. Let’s hope that the businesses we use every day and put our private financial information onto, have this insurance to protect against cyber attacks.
Natasha is an E-Board Member of the Journal of High Technology Law. She is currently a 3L at Suffolk Law with an interest in Health and Biomedical Law. She holds a B.A. in Psychology and minor in Biology and English from the University of Louisville, Kentucky.