Cyber Insurance
Stephanie OrjiStephanie Orji June 2, 2024
Cyber insurance is an insurance policy that is acquired in order to mitigate the risks associated with a cyber or internet presence such as doing business on the internet or other activities, when such risks materialize. The insurance company bears some of the risks depending on the contract between the parties.
Cyber insurance is a safeguard against technology associated risks such as- information and communication infrastructure / engineering risks, systems failure / interruption, cyber attacks (it is broad but should include cyber terrorism), data breaches, ethical breaches, software compromise, legal costs, and so on. It is a mitigating safeguard in the sense that when such risks occur, the insurer bears some or all the burden. Common consequences of materialized cyber risks are – financial loss, data theft, system compromise, disruption, panic, loss of control, and so on.
Why You Need a Cyber Insurance?
With the rise of e-commerce, emphasized internet presence of government entities and private establishments, cyber insurance should be a given. It is necessary to bear the burden of the risk, so that the entity can carry on with its operations.
Nigeria Context
There is a strong case for cyber insurance in Nigeria. Business Day reported that “The National Insurance Commission (NAICOM) and the National Information Technology Development Agency (NITDA) have agreed to activate the process of institutionalizing cyber insurance to help strengthen the digital ecosystem in Nigeria. … this has become necessary in view of growing e-payment transactions, which according to the Nigeria Inter-Bank Settlement Systems (NIBSS) has risen to N38.9 trillion in November 2022 and growing by 50 percent year on year. …”1
For the relevant entities, cyber insurance could also be a standard term in their insurance policies, rather than as a stand alone policy.
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