The COVID-19 pandemic spurred the healthcare industry’s rapid adoption of virtual platforms and care modalities. Hospitals, clinics, pharmacies, private medical practices, and other healthcare organizations and businesses store more data and have more individuals than ever accessing it remotely.
This shift to the virtual world has made healthcare providers prime targets for hackers. The healthcare industry experienced 1,426 attacks per week in 2022 alone. That figure is a 60% increase over 2021, according to research from software company Check Point.
Cyber Insurance for healthcare organizations and businesses is crucial for protecting not only sensitive patient information but also the organizations’ own operations.
In our Cyber U video, Cyber for Healthcare, we explain just how important cyber policies are for protecting healthcare companies from these risks.
Keep reading for information about how a strong healthcare Cyber Insurance policy can defend organizations against financial losses, legal costs and judgments, reputational harm, and more.
Healthcare Organizations Are Hackers’ “One-Stop Shops”
Why do healthcare businesses and organizations face such large cyber risks? It’s because they store patients’ and customers’ protected health information (PHI).
Demand for PHI on the illegal market is high because such information can prove incredibly valuable. Malicious actors can use it for such purposes as identity theft and insurance fraud.
Criminals can also exploit sensitive information about a person’s health conditions, medications, and treatments to carry out targeted phishing scams or to attempt blackmail.
Some PHI commonly found in patient records includes:
- Patient names
- Birth dates
- Telephone numbers
- Home and email addresses
- Social Security numbers
- Biometric identifiers (for example, fingerprints or voice prints)
- Medical record numbers
Additionally, healthcare organizations and businesses usually have patients’ payment information, including credit card numbers, on file.
In short, companies in the healthcare industry are gold mines for cyber criminals—”one-stop shopping” for hackers.
The Health Information Portability and Accountability Act (HIPAA) protects patients’ sensitive information. In the event of a data breach, the law can subject organizations to heavy fines and penalties. The amount can be as much as $1.5 million a year per violation. Even if the business took precautions, they are liable for any data breaches that occur.
How Healthcare Cyber Insurance Protects Against Losses
In 2023, the average cost of a data breach in the U.S. was $4.45 million, a 15% increase over three years. The healthcare sector has overwhelmingly adopted electronic health records and other electronic collection, storage, and transmission of sensitive data. And data thieves’ tools and tactics are always evolving, reaching new levels of sophistication.
Given these realities, Cyber Insurance for medical practices, hospitals, and other organizations is a mission-critical component of any risk management strategy.
A strong policy will include both first-party and third-party liability coverage.
First-Party Cyber Liability Insurance
First-party coverage protects the insured from a cyber attack’s direct cost.
For example, one scenario against which first-party coverage protects is a phishing email attack. If an employee accidentally falls prey to a phishing attack and compromises data, first-party coverage pays for IT staff to establish the extent of the damage, notify potentially compromised patients, and build back the business’s systems more securely.
First-party coverage also protects organizations from ransomware attacks. In a ransomware attack, cyber criminals encrypt an organization’s data and force the business to pay the ransom or lose the data indefinitely. First-party coverage provides financial assistance for paying the ransom, if deemed necessary, so the insured party doesn’t bear the full financial burden itself.
This coverage can also help cover costs associated with investigating the attack, restoring data, and implementing security measures to prevent future cyber incidents.
Third-Party Cyber Liability Insurance
Third-party coverage protects the insured by covering claims from third parties who suffered losses because of a cyber attack.
For instance, if a hacker breaches and steals protected patient data from a business, the Department of Health and Human Services may file a HIPAA violation claim. Third-party insurance covers any regulatory fines and penalties.
Patients can file claims against a business for violating privacy laws if hackers steal their data in the breach. Addressing hundreds or thousands of such claims can become unmanageable. Third-party coverage not only helps pay for defense against such claims but also, in many cases, pays them.
If a business stores credit card payments and doesn’t adhere to payment card industry (PCI) data security practices, affected credit card providers can also press charges. Here again, third-party coverage supports a defense and pays costs, including fines.
Get Expert Help Selling Cyber Insurance for Healthcare Organizations
Cyber attacks are no longer a matter of if but of when. Healthcare businesses can’t afford to wait until they’re attacked to protect themselves. They could lose not only millions of dollars but also their patients’ trust and future business.
To help prevent your healthcare clients from suffering those consequences, download your free copy of our eBook, The Expert Guide to Selling Cyber Liability Insurance. You’ll find out:
- What your clients would pay in a data breach without Cyber Insurance for healthcare organizations.
- Data regulations that apply to your clients.
- The costs of failing to comply with data security standards and regulations.
- How to present and explain both packaged and stand-alone Cyber Insurance Policies.
Get immediate access to The Expert Guide to Selling Cyber Liability Insurance now.
