What is Cyber Insurance?
Cyber insurance is insurance that protects organisations against the financial damage of
cyber incidents.
This includes data breaches, hacks, Ransomware attacks, system outages and legal claims following privacy violations.
Cyber insurance does not replace security measures but provides a safety net when incidents do occur.
🧠 Why a cyber insurance policy?
| Reason | Explanation |
|---|---|
| Financial cover | For recovery costs, forensic investigation, fines, claims, lost revenue |
| Legal support | Often included for data breaches and GDPR matters |
| Limiting reputational damage | Cover for crisis communication and PR |
| Required by partners | Suppliers, supply-chain partners or regulators may require insurance |
| Part of risk management | As a complement to technical and organisational security measures |
📋 What is typically covered?
| Category | Examples of cover |
|---|---|
| Recovery costs | Hiring specialists, system recovery, data recovery |
| Legal costs | Lawyers, GDPR notifications, proceedings |
| Third-party claims | Complaints from customers, citizens or partners following data breaches |
| Ransomware payments | Sometimes (within pre-agreed limits and conditions) |
| Business losses | Loss of revenue or production due to system outages |
| Communication costs | Crisis communication, press relations, notifications to data subjects |
Note: cover varies considerably between insurers. Exact policy terms are essential.
🔐 Relationship to security and governance
| Concept | Relevance to cyber insurance |
|---|---|
| Security by Design | Premium discount or cover requirement: evidence of preventive measures |
| Continuity management | Required or assessed in policy terms |
| Incident Response Plan | Rapid incident response is essential for damage limitation and claim handling |
| Governance | Who is responsible for claim notification, coordination, communication? |
| BIO / AVG | Compliance affects liability and cover |
🏭 Cyber insurance in an OT context
Cyber insurance is relatively new in Operational Technology (OT), but increasingly important:
| OT risk | Possible damage / claim |
|---|---|
| Process downtime (SCADA/PLC) | Production losses, supply penalties, customer claims |
| Data breach via edge or remote access | GDPR fines, reputational damage, liability |
| Ransomware in the OT network | Recovery costs, forensic investigation, restart costs |
| Loss of water or energy availability | Public and legal consequences for utilities |
Many insurers require technical security measures in OT zones, such as network segmentation or IEC 62443 compliance.
❌ What is often not covered?
- Wilful negligence or poor management
- Known vulnerabilities for which no patch was applied
- Fines from contract breaches outside the scope of the policy
- Reputational loss without direct financial consequence
✅ Best practices when taking out cover
- Have a cyber risk analysis carried out before applying
- Ensure an up-to-date security policy and Incident Response Plan
- Involve legal, IT, OT and communication in your decision-making
- Understand the exclusions and notification obligations in the policy terms
- Consider a deductible that fits your risk profile
📌 In summary
Cyber insurance is not a replacement for security but a strategic safety net.
In a world where digital disruptions quickly escalate financially and legally, it is a valuable element of your Governance and Business Continuity.