4 Reasons why business cyber insurance may become mandatory
With cyber insurance increasingly becoming “vital to most countries’ economic health,” this coverage is set to become mandatory in future, a Canada-based cyber insurer executive believes.
Given the growing sophistication and increased frequency of cyberattacks on businesses across the globe, according to Vishal Kundi, CEO and co-founder of BOXX Insurance, cyber insurance will become as essential as worker’s compensation – which is a required insurance purchase for almost all businesses.
Kundi released a whitepaper in which he provides reasons why cyber insurance will become mandatory.
“In today’s world of digitization and COVID-19 pandemic-induced remote working, cyber risk is fast becoming an everyday risk that touches nearly every business in the same way as workers’ comp exposure does,” Kundi writes in the whitepaper. “Nearly all businesses worldwide depend on a constant connection to the internet. Being digitally connected has led to a new era of digital cost, crime and privacy exposure that’s wreaking havoc on businesses and society and allowing the aggressors to collect great fortunes.”
4 Reasons Why Cyber Insurance May Become Mandatory
In his whitepaper, Kundi provides four main reasons why cyber insurance may become a required purchase for businesses of all sizes: 1. Cyber insurance is core to building a digitally resilient, healthy business sector, which is vital to most countries economic health. In most countries, 90% of employees in the private sector work for small to medium-sized (SME) companies. It’s also widely reported that 60% of SMEs fail after being a victim of cybercrime. Without cyber insurance, governments would be left picking up the bill for businesses that become ‘digital roadkill’, as per Kundi. 2. Governments are setting the climate for cyber insurance to protect businesses from the “Privacy Revolution.” In the same way that the industrial revolution brought to light hazardous work conditions that led to governments introducing health and safety standards enforced by regulation, with workers’ comp insurance as a final back-stop, Kundi predicts that today’s pace of digitization highlights equally toxic exposure: data privacy. “It’s not a leap to see cyber-crime insurance, or at least the data privacy liability elements, following the same path as workers’ comp insurance.” 3. The ‘dark forces’ behind ransomware attacks will fade away. “It’s predictable to see coverage for ransomware scale back as governments say enough is enough,” Kundi says. “More manageable cyber blackmail threat exposure will lead to a less unstable cyber insurance market.” 4. Cyber insurance eligibility needs will raise the bar on business performance. “Progressive versions of workers’ comp have led to improved employee health and safety measures and proactive prevention efforts to reduce the risk of workplace damages,” Kundi writes. “Similarly, as we better understand cyber risk, better data will show the connection between risk mitigation and cyber losses, pressuring companies to invest in protection & security.” Insurers will also become better at helping companies understand cyber risk-management effects on potential revenue, profit, brand and overall success, he adds.
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