All commercial industries have been heavily affected by the COVID-19 pandemic. Businesses scrambled on how to adapt and survive this crisis that has taken the world by surprise. The insurance industry is one of the industries affected. Startup companies began to strengthen and adapt various innovative technologies known as Insurtech. This enabled insurance companies to provide continuous security coverage for businesses.
To adapt to this new normal, business owners had to shift online operations to stay afloat. The year 2021 has seen a huge rise in digital revolutions. Online operations and e-commerce have increased considerably. However, there’s an increasing trend of cyberattacks on businesses.
Cybercrimes have increased along with the rise of the digital revolution. According to the World Economic Forum, cybercrime is amongst the most significant threats to businesses. All companies, whether small or big, are at risk for cyberattacks. The increased risks of cyber threats on businesses have influenced the growing demand for cyber liability coverage.
What is Insurtech?
Insurtech is the combination of insurance and technology. The insurance industry utilizes a wide range of technological innovations. These technologies help strengthen the operation of insurance companies. This innovation provides efficient, accurate, and cost-effective coverage to every business.
With the current health situation, lockdown and social distancing are the new normal. To continuously protect everyone, many insurers have revamped their services digitally. This new advancement in insurance technology helps in providing convenient, secure, and multi-option coverage to customers.
Benefits of Insurtech to Customers:
- Lower Premium Rates
Traditional coverage rates depend on various factors including operating costs. This new advancement in insurance technology has lessened the operating costs of insurance companies. This results in lowered insurance premiums.
Getting protection coverage has never been this easy. With the rise of digital transformations, you can now get insurance policies through smartphone apps. It is more cost-effective and time-saving.
- Customized Insurance Coverage
This innovation enables the gathering of comprehensive data from applicants. Insurers now use more personal data to provide insurance coverage tailored to customer’s needs.
- Accessibility to different insurance providers
With innovative digital technology, business owners have more access to numerous insurance providers. It is now easier to research and compare insurance quotes from various insurance companies.
- Multiple Options
This new advancement in insurance technology provides access to numerous insurance companies. This gives customers various coverage options to choose from. It is easier to shop for insurance coverage that will meet your business protection needs.
- Claims Management
The emerging insurance technology has improved insurance provider’s claim processing and management. This resulted in more efficient and effective reporting and processing of insurance claims.
- Coverage for all
Innovative insurance technology has improved data processing and data mining. This lowered the difficulties of dealing with the complexities of small businesses. It enables insurers to cater to small and big-sized enterprises.
- Billing Efficiency
With the emergence of new technology, the billing system now implements multiple payment methods. Automated systems are also utilized for payment reminders. This lowers the chances of unintentional default of the insured.
Insurtech and Cyber Liability
More and more insurance companies have invested in various innovative technologies. This helps in assessing potential cyber security threats present in every company. This will help in determining potential financial loss associated with cyber risks.
With the increased reliance on digital operations, Insurtech became extremely beneficial to businesses. This innovation delivers game-changing solutions to various business industries. Here are the samples of game-changing technologies insurtech uses:
Innovative Insurance Technologies:
- Artificial Intelligence
Artificial intelligence is software that can perform human functions like reasoning and learning. The most notable example of AI is chatbots. Insurance providers utilize chatbots to provide efficient and prompt customer service to customers.
- Machine Learning
This new advancement in insurance technology also uses machine learning. It allows insurance providers to efficiently mine data and obtain valuable information. Insurers utilize data analytics from learning machine for the following purposes:
- Demand Modeling
This uses a numerical model to evaluate coverage premiums. It also forecasts prospective demands for insurance products.
- Risk Modeling
It interprets data claims to foresee possible risks of future losses and costs.
- Processing Claims
Insurance companies use machine learning to automate reporting and processing of claims. This results in the swift and efficient reporting and processing of claims.
- Fraud Detection
Machine learning is being utilized to detect fraudulent patterns of behavior.
This helps underwriters to evaluate, indicate errors, and verify accurate data from applicants.
- Internet of Things
This uses telematics to connect an electronic device to ordinary machines like vehicles. Organizations with fleet operations greatly benefit from this. A GPS-enabled device connected to vehicles tracks location, driving speed, and acceleration. Commercial auto insurers use this data to give discounts, boost safety and evaluate accidents.
- Smartphone Apps
This enables insurance companies to streamline the insurance process for customers and businesses.
Drones are usually used to inspect dangerous property like rooftops and disaster areas. It is also used in capturing hard-to-reach auto accident areas. This technology can help in evaluating and maintaining workplace safety.
- Big Data
This is planning and reporting software. It has storage data, regulatory technology, diagnostic and reporting tools. It enables a better understanding of customer’s behaviors and preferences.
Insurance providers use innovative technology to offer cybersecurity solutions for companies. This will help combat the growing cases of cyberattacks.
The Rise of Digitization and Cybercrime
COVID-19 has caused a huge rise in digitization. Businesses have adapted various digital ways of working to continue business operations. The rise in digitization is directly proportional to cybercrime. Nowadays, there are increasing cases of cyberattacks in businesses. This has greatly influenced the demand for cyber liability coverage.
This pandemic has forced the closure of nearly all establishments worldwide. From government offices to schools to business establishments. This prompts the need for digital operation. Businesses have developed various digital strategies to ensure continued business operations.
Digital Strategies Businesses Use:
- Remote Work
Government-mandated lockdowns have forced offices to close down. Most employees have shifted to remote working.
- Digital Content Consumption
As the current health crisis extended itself, the demand for digital entertainment has doubled. Digital content providers like Netflix, Hulu, and HBO have become relevant.
- Digital Health Solutions
This pandemic has overwhelmed hospitals with COVID-19 patients. This prompts various health institutions to go digital to accommodate other patient’s needs.
As many establishments moved away from the brick-and-mortar business model, these companies have started a rising trend of online business. Now, services and products have thrived online and inevitably became the name of the game. From grocery shopping to fashion staples, everything was done through transactions via the internet.
Various institutions and organizations have established their digital platforms. This helps them to stay relevant and connected to their clients.
Most businesses have switched to digital operations to survive and stay afloat. Through digitization, businesses have finally found a way to operate in this new normal. But here’s the catch, businesses are at risk from liabilities now more than ever. Apart from the usual liability risks, businesses are now more vulnerable to cyber liability.
As a business owner, how do you protect your business from the risks of cyber liability? Now more than ever is the perfect time to insure your business with cyber liability coverage. This will protect your business from data breaches and cyberattacks. More and more businesses have been susceptible to hacking and malware attacks. Cyber threats have no exemptions. Big or small businesses can experience cyberattacks. In fact, 55% of small businesses have suffered from data breaches.
Cyberattacks that Affects Businesses
- Supply Chain Attacks
Hackers can harm a company by attacking unsecured elements of the supply chain software.
- Phishing and Business Email Compromise
These types of attacks mimic senior company officials and deceive employees and clients to make payments for products or services to cybercriminal bank accounts.
- Distributed denial-of-service attacks (DDoS)
It is a disturbance in the normal traffic of a server, network, or service by crashing the target website with too much internet traffic. This will take down a website and render it inoperative.
It is a kind of malware attack that encrypts or threatens to leak the victim’s sensitive information. Cybercriminals often ask for ransom money in exchange for a decryption key.
Consequences of Cyber Crimes on Businesses
Cybercrimes such as data breaches disrupt business operations. It also causes liability claims.
Data breaches could lead to:
- Revenue Loss
Cyberattacks cause various damages to your business which can lead to revenue loss. Revenue loss can arise from:
- Forfeiture of business contracts
- Theft of confidential corporate information
- Disruption of work operation
- Theft of financial information and money
- Loss of Intellectual Property
A cyberattack could lead to a loss of intellectual property. This can impact the quality and competitiveness of your business.
- Online Vandalism
Some cybercriminals get pleasure in making pranks and vandalizing business websites. This may seem relatively harmless, but it may cause a lot of damage to your business. This may result in damage to your brand reputation and loss of consumer confidence.
- Damage to Brand Reputation
A security breach can damage a business’s reputation. This can lead to the loss of consumers’ confidence.
- Hidden Costs
A data breach can cause huge financial costs. A data breach does not end in repair and ransom costs. It could also lead to various expenses like:
- Legal liabilities and legal fees
- Hike in insurance premiums
- Regulatory sanctions and fines
How to Prevent Cyber Attacks on your Business
Every year one in five businesses encounters a cyberattack. 81% of data breaches happen in small and medium-sized businesses. But did you know that with the present technology, 97% of cyber-attacks are preventable? Here are some pointers to safeguard your business from cyberattacks.
Tips on how to prevent cyberattacks:
- Secure Networks and Devices
It is important to secure your network and devices to prevent cyberattacks. There are several ways to safely secure networks and devices.
- Software and System Updates
Perform regular updates on all software and operating systems used by the company. New updates may contain updates that fix security flaws. Outdated software security allows hackers to access the company’s network.
- Security Software
It is important to install security software. It will protect your networks and devices against viruses, spyware, and spam.
A firewall serves as a gatekeeper for incoming and outgoing traffic. It will protect your network and devices from cyberattacks.
- Network and Data Encryption
Sending and sharing data are part of business operations. To protect shared data, it is advisable to activate data encryption. This will prevent data theft, destruction, or tampering.
- Multi-Factor Authentication
Multi-factor authentication uses several methods of identity verification. This provides additional protection aside from credential log-ins and passwords.
- Routine Data Backup
It is important to perform a routine data backup. A routine data backup will save your business from loss of data, system downtime, and financial loss in the event of a cyberattack. It is advisable to have a systematic backup method which includes:
- Daily cumulative backup to cloud storage or portable devices.
- Weekly server backups
- Quarterly server backups
- Annual server backups
- Manage Passphrases
It is wiser to use passphrases instead of passwords. Passphrases are a string of words or phrases used to gain access to a computer network or system. It is harder to crack random passphrases than passwords.
It is advisable to use random and unique passphrases, at least 14 characters long. It should be complex, containing upper and lower case letters, numbers, and special characters.
- Wi-Fi Security
It is important to secure your Wi-Fi networks. An infected device can easily compromise your system and networks. Hiding your Wi-Fi network is highly recommended to avoid infected devices accessing your network and system.
- Access Management
It is essential to track and control access to the company’s networks and system. It is important to have admin rights and prohibit employees from installing software and applications.
Limiting employee’s access to certain networks and systems will lessen the risks of cyber threats. For tenured employees, it is important to perform protective actions to avoid unauthorized access to networks and devices. This includes deleting passwords and accounts, surrendering company badges and entry keys terms.
- Regular Cybersecurity Risk Assessment
A regular cybersecurity assessment will help businesses avoid future cyberattacks. Companies can analyze possible cyber threats against their business. Businesses can address possible cyber risks and create preventive steps to manage the risks.
- Computer Equipment and Systems Usage Monitoring
Businesses need to keep a record of all computer equipment and software it uses. Take safety precautions when disposing of devices and software. Be sure to remove all important and sensitive information from any devices that are no longer in use. Make sure to disconnect unused or damaged devices from the company’s network before disposal.
- Web and Email Filters
Web filters will protect your network from unexpected hacker attacks. Email filters are useful in preventing spam emails and flagging suspicious phishing emails.
- Employee Personal Accounts
It is beneficial to provide a single sign-on for every employee. This allows employees to separately log in with their credentials once a day, thus reducing hackers’ opportunity to attack.
- Employee Cybersecurity Training
It is essential to provide training to your employees on how to prevent cyber attacks. Cybersecurity training should include the following:
- Cybersecurity Awareness
- Password security training
- Recognizing phishing and social engineering attacks
- Reporting and managing cyber threat
- Cybersecurity Policies and Procedure
Create a cybersecurity policy and procedure every employee must follow. This should include rules and regulations on safely sending data over networks and accessing online applications and internet resources. The cybersecurity policy and procedure should cover the following:
- Standard procedure in email encryption
- Process of remote access of work applications
- Protocol for creation and protection of passwords
- Policy for social media use
- Reporting of cybersecurity attacks
- Disaster recovery plan
- Disciplinary action
- Cybersecurity Disaster Recovery Plan
In the event of a cyberattack, it is essential to have a cybersecurity plan for disaster recovery. This will help control the extent of the damage, accelerate the recovery process, and ensure business continuity. There are several types of recovery programs your company can use in case of a cyberattack.
Types of Disaster Recovery Plan
- Data Center Disaster Recovery Plan
- Cloud-based Disaster Recovery
- Virtualization Disaster Recovery
- Disaster Recovery as a Service
- Customer Protection
It is important to protect your customer’s information. Compromising customer’s information can lead to brand damage and loss of consumer confidence. It is necessary to provide a safe online transaction to prevent data breaches.
- Cybersecurity Insurance
Cybersecurity insurance will protect your business in the event of a cyberattack. It will cover the costs of repair and liability costs of cyberattacks.
The Importance of Cyber Liability Insurance
Cyber liability insurance is your business’s safeguard against possible cyberattacks. This will cover your business from possible financial costs caused by cybercrimes.
Cyber Liability Insurance Coverage
- First-party Coverage
This covers company expenses incurred as a result of a data breach. It reimburses the following expenses:
- Cyber Extortion
This policy compensates for ransom payment to hackers.
- Crisis Management
Cyber liability insurance covers crisis management expenses.
- Data Restoration
It reimburses the expenses for replacement or repair of electronic data, programs, or software caused by the following:
- A hacker attack
- DoS attack (Denial-of-service attack)
- Other covered risks and hazards
- Notification Costs
This will cover the costs of informing affected clients of a data breach.
- Loss of Income and other Expenses
It covers losses of revenue and expenses incurred to restore the business operation after a shutdown brought by a cyberattack.
- Third-party coverage
This covers expenses for damages and obligations as a result of liability claims and lawsuits. It includes:
- Electronic Media Liability
This policy will cover expenses for the following lawsuits caused by the insurer’s disclosure of electronic data on the internet:
- Copyright infringement
- Domain name infringement
- Invasion of privacy
- Network Security and Privacy Liability
It compensates for liability claims resulting from negligent acts, errors, and omissions.
- Regulatory Proceedings
This policy also covers fines and penalties from regulatory agencies in the event of a data breach.
Many prominent insurance providers offer cyber liability coverage in Denver, Colorado, and around the United States.
Insurance providers that offer cyber liability coverage:
- Berkshire Hathaway
- CNA Insurance
- Hartford Insurance Group
- Liberty Mutual
Like any other insurance coverage, cyber liability coverage has exclusions. The following are exclusions from cyber liability coverage:
- Bodily Injury and Property Damage
- Contractual Liability
- Actions committed before the retroactive date (if applicable)
- War and Terrorism
- Utility Failure
- Fraud committed by the insured
- Cost of restoring computer systems to a higher level of functionality than they were before.
It is vital to fully equip your business with insurance coverage that will protect you from possible business liability claims. It is important to make an in-depth look at possible risks and hazards that can damage your business. Ensure proper and appropriate insurance protection that will cover all possible business liabilities.
To fully protect your business from possible risks and liabilities, secure your business with necessary insurance coverage that will cover cyberattacks, damage, accidents, etc. This will ensure your business operations are physically and digitally secured and safe.
Additional Insurance Coverage for your Business
It will protect your business from various liability claims. This will cover the following liability claims:
- Bodily Injury and Property Damage Liability
It will cover expenses for bodily injury and property damage caused by your business.
- Medical Payments
This will cover customers’ medical expenses for any sustained injury in the event of an accident on your business premises.
- Personal and Advertising Injury
This will protect your business from liability offenses such as slander, libel, copyright infringement, etc.
- Damage to rented property
This insurance policy covers any damage to rented property caused by explosion, fire, or lightning.
This is beneficial for businesses that render professional services such as financial advisers, registered investment advisers, etc.
- Product Liability Insurance
This is specifically beneficial for online retailers that provide cosmetic and medical supplies. This will protect business owners when supplied products cause damage or injury to customers.
- Equipment Breakdown Insurance
This will cover repair and replacement expenses for damaged pieces of equipment like air-conditioning, boiler, and computer and security systems.
Business always comes with risks and these risks shouldn’t be taken lightly. One simple liability can cost way more than a business insurance premium would. In this new normal where everything seems to be uncertain, it is good to be prepared and protected. Contact us today and let’s talk about how we can protect your business. We provide customized business insurance coverage to meet every business owner’s financial and protection needs.