Cyber Insurance for Startups
Cyber crime is currently considered the biggest threat in the contemporary business landscape. As businesses embrace digital transformation and cloud migration, the risk of experiencing cyber attacks grows. According to an industry study, global cyber crime costs are expected to increase by 15% per year, reaching $10.5 trillion annually by 2025.
While cyber attacks affect various types of consumers and businesses, startups are particularly vulnerable to this threat. These organizations typically need more expertise and resources to defend against cyber attacks. This is one of the key reasons why Cyber Insurance for startups is so essential.
To thrive in a constantly changing market, startups should be flexible and agile. These businesses can’t afford to be crippled by cyber attacks, for even a short downtime can lead to massive losses. Let’s explore how the best Cyber Insurance can help mitigate these risks.
5 Reasons Why Startups Need Cyber Insurance
Cyber Insurance is designed to help businesses mitigate losses from cyber attacks by covering breach and restoration costs. Below are the top reasons why Cyber Insurance for startups is a worthwhile investment for growing businesses.
1. To Protect Against Cyber Criminals
Cyber criminals can find and exploit weaknesses in businesses, regardless of their size and industry. However, there are several reasons why startups are attractive targets for threat actors, including the following:
- Lack of Resources: Startups generally devote most of their efforts to business growth rather than cyber security. As a result, they may overlook securing endpoints and updating their systems, leaving them open to attacks.
- Multiple Interfaces: Internet of Things (IoT) devices and applications provide startups with a convenient way to share information and communicate. Unfortunately, the widespread use of IoT devices within an organization can create a larger attack surface for threat actors. Cyber criminals can exploit poorly secured devices to gain access to networks.
- Third-Party Vulnerabilities: New businesses typically partner with larger enterprises as third-party vendors. Cyber criminals see this as an opportunity to find entry points to more valuable networks to compromise the systems of larger companies.
2. To Protect Customer Data
Even small startup companies handle customer data, including personal information and transaction history. A successful cyber attack can put this information at risk and affect the organization’s reputation. For new businesses, having a damaged reputation can make it harder to bounce back. According to recent industry research, 59% of customers will avoid doing business with a company that experienced a cyber attack in the past year.
Cyber Insurance can provide a safety net for organizations and their customers. The best Cyber Insurance policy will cover the costs to notify affected stakeholders and pay settlement expenses to protect sensitive information.
3. To Safeguard Proprietary Information
To succeed in the constantly changing market, startups should introduce cutting-edge solutions and innovative ideas to their industry. Unfortunately, this proprietary information is an attractive target for cyber criminals. Once cyber criminals infiltrate an organization’s network, they can steal valuable internal data and proprietary information. Cyber Insurance for startups can cover the monetary losses and ransom costs if hackers demand payment for safe data return.
4. To Avoid Business Interruptions
Some cyber crimes, such as ransomware and distributed denial of service (DDoS) attacks, are designed to cause business interruption. In 2021, the average downtime for a ransomware attack was 20 days. The operational disruptions caused by these cyber attacks are damaging for startups, resulting in enormous downtime losses or extortion fees. Cyber Insurance coverage can protect organizations by compensating for business interruption losses or ransom payments.
5. To Mitigate Consequences of Cyber Crimes
While startup sizes and organizational structures vary, many new enterprises with few employees fail to implement discretionary data storage and access. Sensitive information is stored in cloud storage solutions and is easily accessible by employees. Unfortunately, this situation increases the risk of total takeovers, as hackers can access sensitive data by compromising a single device. The average cost of a cyber attack is $200,000, which is enough to put many startups out of business.
Cyber Insurance for startups mitigates the negative consequences of cyber attacks by providing financial support for forensic investigation and crisis management.
Help Clients Enhance Their Cyber Security with ProWriters
Rapid digitization and technological advancements have made companies more vulnerable to cyber crime. However, startups can thrive in the tumultuous threat landscape by incorporating cyber security into their core strategies.
Aside from securing systems and investing in risk management tools, Cyber Insurance for startups is critical to building a strong defense. Brokers can help companies choose the best Cyber Insurance policy that addresses their unique exposures.
At ProWriters, we help brokers like you serve your clients better by providing flexible Cyber Insurance coverages. With more than 20 years of experience, we have established relationships with the industry’s top carriers to bring brokers the best Cyber products for their clients. Reach out today to learn how we can help!