Cyber Insurance for Indian Businesses
In the first half of 2024, India has faced a sharp rise in cyberattacks, with 593 incidents impacting crucial sectors like education, government, and technology. Organisations were hit with an average of 2,807 weekly attacks, leading to significant problems including major disruptions and financial losses. The average cost of a data breach has reached Rs 19.5 crore, with breaches involving public cloud data costing up to Rs 22.7 crore. The specific cyber incidents affecting Indian companies this year highlight the urgent need for businesses to be well-prepared and protected against these growing threats:
1. In February 2024, Burger Singh, a famous Indian fast-food chain, faced an unexpected problem—a cyber attack. Hackers took over their website and posted strange messages.
2. In August 2024, nearly 300 small banks across India were hit by a ransomware attack targeting C-Edge Technologies, a provider of banking technology systems. This incident temporarily crippled payment systems and isolated these banks from the national payment network to prevent the spread of the attack.
3. In mid-2024, Air India faced a data breach where passenger data was compromised. This incident raised concerns about the cybersecurity protocols of major Indian airlines, especially in protecting sensitive customer information.
These incidents are a strong reminder that cyber threats are real and can happen to any business, whether big or small.
What can protect your business from cyber-attacks?
But, what is Cyber Insurance?
Cyber insurance is like a safety net for businesses when they face problems related to their online activities. Just as health insurance helps cover medical costs when you're sick, cyber insurance helps cover costs related to issues like hacking, data breaches, or other cyberattacks. It helps businesses recover by covering expenses like restoring data, notifying customers, and sometimes even legal costs.
In simple terms, if something goes wrong with your computer systems or data, cyber insurance helps you manage the financial impact.
How does Cyber Insurance help your business?
When you purchase cyber insurance, it's crucial to understand what is included in the coverage and what is excluded. Cyber insurance typically protects two main areas: first-party and third-party damages. Each type of coverage addresses different risks associated with cyber incidents, ensuring your business is comprehensively protected.
First-Party Coverage:
First-party coverage deals with the direct impact of a cyber incident on your own business. Here’s what’s typically included:
1. Incident Response Costs:
This covers the immediate expenses your business incurs when responding to a cyber attack, including hiring IT experts for forensic analysis and crisis management.
2. Recovery Costs:
If your data is lost or systems are damaged during a cyber attack, the costs of restoring this data and repairing your systems are covered.
3. Business Interruption:
Suppose a cyber incident disrupts your operations, causing a loss of income. In that case, this coverage will compensate for the lost revenue and any extra expenses needed to keep your business running during the downtime.
4. Reputational Damage:
Cyber attacks can harm your brand’s reputation. This coverage includes the costs of public relations efforts to restore your brand’s image and regain customer trust.
5. Monitoring and Notification Costs:
If customer data is compromised, your business may need to notify affected individuals and provide credit monitoring services. These costs are covered under first-party coverage.
6. Cyber Extortion:
If hackers demand a ransom, this coverage includes the ransom payment and the costs of negotiating with the attackers.
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7. Reward Expenses:
If you decide to hire experts to find the source of the attack, the costs associated with this investigation are covered.
8. Crisis Communication:
If a cyberattack occurs, your business may need to inform various stakeholders like customers, investors, and other stakeholders. Costs associated with informing stakeholders are covered.
Third-Party Coverage:
Third-party coverage protects your business from liabilities and legal responsibilities that arise when a cyber incident affects others. Here’s what’s typically included:
1. Legal Damage to Third Parties:
If a cyber-attack exposes customer data and they sue your business, this coverage handles the legal costs and any damages awarded.
2. Regulatory Fines and Penalties:
Should your business be fined by regulatory bodies for failing to comply with data protection laws, this coverage helps pay those fines.
3. Defence Costs:
This includes the costs of defending your business in lawsuits related to the cyber incident, whether the claims come from customers, partners, or regulatory authorities.
4. Privacy Liability:
If sensitive personal information is leaked and your business is held responsible, this coverage pays for the compensation you owe to affected individuals.
5. Network Security Liability:
If the cyber attack on your systems causes losses to third parties, this coverage protects your business against claims related to unauthorised access to data or systems.
6. Conduit Liability:
If your business unknowingly transmits malware or harmful code to another party, you could be held responsible for the damage caused. The costs associated with legal claims and liabilities from this are covered under third-party coverage.
7. Media Liability:
If a cyber incident leads to claims of defamation, copyright infringement, or other media-related offences, this coverage pays for the associated costs.
What should you keep in mind when buying Cyber Insurance?
Whether you’re running a small business or a large corporation, the story remains the same: cyber threats are real, and they can strike anyone, anywhere. Having cyber insurance means you’re prepared to face these challenges head-on, with the confidence that your business can survive and even thrive after a cyber incident.
In the end, insurance isn’t just about protection, it’s knowing that no matter what comes your way, you have the support and resources to bounce back stronger. So, as you think about the future of your business, remember this—being insured isn’t just smart; it’s essential.