Demand for cyber cover growing in the wake of attacks

Insurers are now working to make insurance more accessible to small businesses to help raise their defences

Demand for cyber cover growing in the wake of attacks

Insurance News

By Gabriel Olano

The Japanese business community is becoming more and more aware of the danger posed by cyber attacks, with more companies taking out insurance policies to protect themselves from crime in the digital sphere.

According to a survey of Japanese general insurers conducted by Nikkei, as of March, sales of cyber insurance policies have increased by 250% over the past 12 months. With cyber cover, businesses are protected from liability in case cyber criminals steal customer data and other critical information. Insurance also covers the cost of business interruption, investigations, and restoration of damaged systems.

The Japan Network Security Association estimates the Japanese cyber insurance market to grow by around 15.6% this year, reaching a value of ¥15.6 billion (US$137.7 million).

Taking out these insurance policies have begun to benefit businesses, reports Nikkei. In one case, a Japanese technology firm had to temporarily shut down its services after a hacking attack defaced its website. The incident hit the firm’s sales, and professionals had to be called in to repair the damage. Fortunately, insurance was able to cover over ¥5 million (US$44,000) in costs.

In another instance, an online shopping company’s database was breached and customers’ information, including credit card details, were stolen. Insurance paid out over ¥10 million (US$88,000) to cover the costs of conducting an investigation, establishing a contact centre to receive inquiries from customers, and hiring lawyers.

However, Japanese cyber security still has some gaps in its defences. According to a survey of 1,144 security system administrators by Tokio Marine & Nichido Fire Insurance, more than 60% of businesses have encountered computer viruses and targeted email attacks. The incidence of attacks was 150% higher than the previous year’s figures, but only 10% of respondents said they had cyber insurance.

To combat this, insurers have begun to make cyber insurance accessible even to smaller businesses. Tokio Marine has partnered with software developer TeamSpirit, utilising the latter’s cloud-based accounting services, to provide cyber insurance to small businesses.

Sompo Japan Nipponkoa teamed up with Canon Marketing Japan to create a cyber insurance product for small businesses, while Mitsui Sumitomo Insurance launched a free advisory service for clients. This involves the insurer sending simulated email attacks to assess how the company and its personnel will react to it and determine its cyber security needs.

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