Today, Data Breaches have become an unfortunate reality for businesses of all sizes. The consequences of a Data Breach Incident can be devastating, with huge financial losses, reputational damage and legal liabilities. A Study by Ponemon Institute in 2022 estimated that the Cost of a Data Breach Incident averaged USD4.35 million in 2022 versus USD4.24 million in 2021. The cost of a Data Breach Incident was at an all-time high. Today business owners must be cognizant of the risks of a data breach and take proactive measures to secure themselves against such risks. A Data Breach Insurance Policy also known as a Cyber Liability Insurance Policy is an excellent tool which helps businesses mitigate the risks with breach of sensitive information.
What is a Data Breach?
A Data Breach includes all those security breaches where the confidentiality of the data has been compromised. A Data Breach is defined as an incident which allows an unauthorised party to access confidential, sensitive or personal data, which the party was not supposed to access. For example, a ransomware attack that locks up a company’s customer data and threatens to sell it is an example of a data breach.
There have been multiple incidents of data breach in India over the years. In fact, India reported the second highest number of Data Breach Incidents in 2018.
One example of Data Breach Incident is the data breach at the Unique Identification Authority of India (UIDAI) in 2018. In this incident, it was reported that Aadhaar Database was leaking information on every registered Indian Citizen.
Another Data Breach Incident example in India was that State Bank of India (SBI), one of India’a largest banks. Here, it was reported that SBI exposed customer data including mobile numbers, partial account numbers, balances, and transaction details from an unprotected server in its Mumbai data centre.
Another serious Data Breach Incident occurred at AIIMS Hospital, one of India’s leading hospitals which compromised the personal data of millions of patients including VVIPs. In this incident, it was reported that AIIMS had 3 backup servers in different seismic zones, however, all the servers had been hacked and led to compromise of personal data of millions of patients. Due to such massive impact, it becomes very crucial to protect your business against the potential impact of a data breach with a Data Breach Insurance Policy.
What is a Data Breach Insurance Policy and how does it protect from the impact of a Data Breach Incident?
A Data Breach Insurance Policy helps companies cover the costs associated with a Data Breach by providing cover for first party expenses that need to be incurred following a Data Breach as well as Third Party Cyber Liability Exposures following a Cyber Attack leading to Data Breach.
First Party Exposure in a Data Breach Insurance Policy (Cyber Insurance Policy) refers to costs that need to be incurred following a Data Breach Incident such as:
- Forensic Costs – This includes hiring cybersecurity experts, conducting forensic analysis, and implementing measures to prevent future breaches.
- Customer Notification Costs about the Data Breach Incident
- Credit Monitoring Costs which need to be paid to the affected parties
- Cyber Extortion Negotiation and Ransom Payments
Third Party Liability Exposures refer to legal expenses and liability if the customers sue you following breach of their data. Such expenses are substantial and hence a Cyber Liability Insurance Policy which provides coverage for such expenses is absolutely essential for any business.
Which businesses should buy a Data Breach Insurance Policy?
Any business which collects and stores sensitive customer information and personally identifiable Information should purchase a Data Breach Insurance Policy. Following Businesses which are prone to a data breach incident and should avail data breach coverage through a Cyber Liability Insurance Policy:
- Financial Companies, Insurance Companies and E-Commerce Companies which store information like Credit Card Numbers, Bank Account details etc.
- Healthcare Institutions like Hospital and Nursing Homes which store medical information and health records
What Types of Cyberattacks can lead to a Data Breach Incident?
Common types of Cyberattacks which can lead to a Data Breach include
Distributed Denial of Service (DDoS): In a DDoS attack, cyber criminals flood a targeted network with an overwhelming amount of traffic, which is beyond the orgnanisations’s capacity to manage and leads to a system crash and makes it inaccessible to the general public.
Phishing attack: In a Phishing attack, hackers use deceptive emails or websites to trick individuals into revealing sensitive information.
Ransomware attacks: In a ransomware attack, hackers gain access to confidential data and files and encrypt them. They demand a ransom in exchange for the decryption key.
What is the Cost of Data Breach Insurance?
Cyberattacks are becoming more costly for organizations. More businesses in India are looking to purchase cyber insurance coverage as they become more aware of its significance.
The Cost of a Cyber Liability Insurance Policy depends on factors like scope of the policy, size of your organization, and the extent of your security measures implemented by the company. Additional factors like Policy Limits, Prior Claims Experience and Industry Characteristics are also taken into consideration.
Get Best Cyber Insurance Quotes with Qian!
Qian is a licensed Cyber Insurance Policy Broker and our dedicated team can guide you in selecting the appropriate Cyber Insurance Coverages as per the risk exposures of your business needs.
If you wish to consult us about purchasing a data breach insurance policy for your organization, you can email us at insurance@qian.co.in or call us on 022- 22044989. We would be glad to assist you.
- What is a Cyber Insurance Policy?
- What is Cyber Threat or Cyber Risk?
- On Security Insurance Necessity For Businesses
- What does a Cyber Insurance Policy Cover?
- What kind of losses does a Company suffer on account of Cyberattacks and Security Breaches?
- What is the average Cost of a Cyber Incident?
- What are the First Party Liability Coverages under a Cyber Liability Policy?
- What are the Expenses Covered under a Cyber Liability Policy?
- What are the Third Party Liability Coverages covered under a Cyber Liability Insurance Policy?
- Cyber Security Insurance Policy (Why Does It Matter?)
- What are the Exclusions under a Cyber Liability Insurance?
- Cyber Insurance Policy Cost (What is reasonable?)
- Get Best Quotes for Cyber Insurance Policy with Qian