If the cost of cybercrime were to be measured in terms of a country’s economy, it would be the third-largest economy in the world, after the US and China.
The eCommerce industry is thriving in Singapore, with close to 60% of the population shopping online. This is great for businesses, and it makes goods and services more accessible to consumers.
Unfortunately, this also means businesses are increasingly vulnerable to cybercrimes.
- In 2018, Singapore suffered one of the worst cyber attacks, where hackers attacked SingHealth, and accessed the personal data of over 1.5m patients.
- In 2020, multiple universities and higher institutions of learning reported security breaches.
- In 2021, Singapore was one of the countries targeted when the Microsoft Exchange Server software faced a series of cyber attacks.
Unfortunately, even as government agencies and businesses put measures in place to protect their systems, hackers come up with countermeasures to infiltrate them. It is basically a game of ping-pong with devastating consequences.
This is why Cyber Security Insurance security is critical.
What Cyber Security Insurance?
Every website is vulnerable to cyber-attacks. It doesn’t matter if you are running a small or large business, the online data is at risk. The only difference is the impact of the attacks, where property worth millions can be destroyed within a short time.
There is also the question of the extent of the liability. According to Channel Asia, organizations in Singapore pay up to 1.7 million Singapore Dollars (1.26 million US dollars) per breach. It is estimated that organizations face about 54 cybersecurity incidents daily.
If all these resulted in data breaches, companies wouldn’t be able to keep up with the compensations, and bad publicity. Unfortunately, there is always the risk of malicious third-party infiltration. This is where cyber security insurance comes in.
Cyber security insurance covers property and liability insurance. It helps protect against losses incurred when an unauthorized third party, with ill intentions, gains access to a company’s digital assets.
They include software and hardware. The attacks covered in cyber insurance include;
- Malware attacks.
- Phishing scams.
- Virus attacks leading to hardware malfunctions.
- Ransomware.
The eCommerce industry is susceptible to cyber-attacks because of its digital assets. It has sensitive client information, including credit card information, residential addresses, phone contacts, driver’s license numbers and so much more.
When this data lands in the wrong hands, it can be a nightmare for millions of people and the companies involved.
Cyber Insurance helps protect companies against losses, arising from lawsuits and client compensations. The claims also cover the cost of replacing damaged systems, the negotiation and payment of ransomware, as well as the hiring of public relations experts to perform damage control.
Loss of profits due to business interruptions is also covered.
How Cyber Insurance Works
Cyber Insurance was for years under general liability insurance cover. However, as the risks associated with cyber crimes grew, many insurance companies opted to sell the cover as a separate entity.
Like other insurance covers, cyber security has a range of policies that companies choose from, depending on the risk assessment.
Cybersecurity insurance policies fall under two broad categories.
- Third-party liability. This protects the company when legal action is taken by vendors, customers, and any other party after a data breach. The coverage includes compensation and legal fees.
- First-party coverage. This covers the affected company and the costs associated with the breach. Some of the policies under this category include data loss insurance and ransomware.
Companies can decide to take policies under both categories (which is recommended), or just one category. Considering the risks associated with cyber crimes, the premiums attached to cyber insurance can be prohibitive.
However, for most companies, it is not a question of if there will be a breach, but when. Even with the establishment of systems to prevent attacks, the risk remains. So businesses, irrespective of size, are better off having cyber insurance as prevention is always better than cure.