Cyber insurance is the terminology and a form of “accountability” insurance that has been provided to cover any business for costs they suffer as a result of the hacking, failure of systems, and other external factors in which the company’s own data as well clients data is stolen, manipulated and destroyed.
Cyber risk is growing steadily as data breaches affect millions of users yearly and it is expected to rise in the coming years exponentially. Awareness of cyber insurance has increased due to wide media attention and various litigation filed in the public domain recently. It generally covers an organization for a data breach involving consumer information, such as driver's license number, bank account number, social security number, credit/debit card number, and health records.
Coverages for cyber insurance provide a means for individuals and companies to transfer a part of financial exposure to the insurance markets. The intention of cyber insurance as any other form of insurance is to simultaneously reduce the risk as well as provide the aggrieved party with some form of redressal. It also provides cover for regulatory investigations or actions in case of a breach and business interruption and price of notifying consumers, without the requirement for physical damage which is a standard trigger under property policies.
Globally companies are becoming more and more dependent on the Internet, database, technology, artificial intelligence. This has exposed businesses to the online world at a large level. This has also opened doors for hackers, data thieves, and other external entities to efficiently break the company's online security barriers.
The factors majorly driving the Cyber insurance market are the growing number of cyberattacks and Cyber Threat awareness and Mandatory Legislation Regarding Cyber
Security. There are various regulatory bodies actively looking after company rules & regulations for addressing cybersecurity and cyber insurance policies. The Australian Securities and Investment Commission, Cyber Insurance Forum (Australia), National Association of Insurance Commission (U.S. – Cyber Security), Cyber Security Regulations and Incentives Review (U.K.) are some of the biggest influencing regulatory bodies at the global and at the regional level.
According to a newly released report from the Australian Government in 2017, the number of data breach cases is on the rise. This has triggered the demand for Cyber Insurance in Large and Mid-Level institutions. This has affected various e-commerce companies especially considering the huge database of end-users.
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