Market Trends of UK Cyber (Liability) Insurance Industry
Impact of Cyber Insurance Policy Coverage
Until recently, cyber insurance products covering business interruption losses and physical damage were only offered by a few insurers. Now, however, 96% of insurers cover business interruption losses, and an increasing number of insurers are also offering coverage for first-party losses. Coverage is continually changing and expanding to reflect the dynamic nature of cyber risks and trends. As the variety of cyber incidents and types of losses that cyber insurance increases can cover, the benefit to UK businesses of investing in cyber insurance will also likely increase. Cyber insurers and brokers are also becoming better able to understand a particular company’s insurance needs, tailoring cover appropriately. Some cyber insurance policies may require the insured organization to meet specific cybersecurity standards or demonstrate improvements in security practices. Failing to meet these requirements could affect coverage.
Impact of Disruptive Cyber Security Breach for Businesses
Cyber insurance policies typically have coverage limits that may not fully cover the costs associated with a severe breach. Businesses may still be responsible for covering certain expenses beyond the policy limits. Most cyber insurance policies have deductibles, which means the business must pay a certain amount out of pocket before the insurance coverage kicks in. The size of the deductible can significantly impact the financial burden on the organization. Even with cyber insurance, a major data breach can harm a business's reputation. Customers and partners may lose trust in the organization, leading to a loss of business and long-term damage. Cyber insurance may cover certain legal expenses and fines resulting from a breach, but not all costs may be covered. Regulatory fines and legal settlements can still have a significant financial impact on the organization. Cyber insurance can help cover the costs of incident response, forensic investigations, and recovery efforts. However, the full extent of these costs can be challenging to predict, and insurance may only cover some aspects.
