GDPR is coming in May, But why buy Cyber Insurance?
Cybercrime is fast increasing and with the European Union having concluded the legislation that has been forthcoming since the year 2012, whether companies will seek cyber insurance remains to be seen. This legislation is expected to seal some outlets that have enabled the escalation of cybercrime activities. In addition, it will diversify company obligations especially those that handle individual personal data. This will affect both small and big organizations.
(GDPR) General Data Protection Regulation is a European Union law for data protection. It is effective in the whole of the European Union member states, and seeks to address the transmission of individual’s personal data outside of the European Union. By so doing, this will enable individuals living within the EU to control their personal data and does not require the passing of any legislation from national governments.
Important Facts within the GDPR
When the GDPR comes into effect, organizations will be responsible for developing data privacy and protection within their organizational structures. They will be required to ensure that staff training, processes, and information technology services comply with the set regulations, and that any data handling is legitimate and validated.
The authorities are privy to the fact that some corporate companies fail to report cyber crime. This will seize to be the case with the enactment of the GDPR. All companies shall be obligated to inform the responsible authorities about any cybercrime within the course of 72 hours. Depending on the magnitude of the crime, they may be liable for alerting the affected individuals.
GDPR outlines strict measures in regard to having a binding consent for the access and utilization of data, especially the movement of data outside the European Union. This will require companies to analyze their data protection policies in anticipation for the fast approaching enactment date. Companies will need to hire professional and experienced data specialists, as well as execute effect and risk data processing evaluations. In addition, they will be required to outline reporting procedures to enable them to report cyber breach within 72 hours.
What Will Happen in the Event of Non-Compliance
Companies will be required to pay penalties according to the nature and magnitude of the breach. The maximum penalty has been set at 4% of overall turnover. This is massive and can easily paralyze a company’s operations, which mean that they will need insurance at least to lower risks. Insurers may provide risk reduction and management plans to lower possible breaches while enhancing their client’s structures. Various insurers may choose to train their clients on the importance of evaluating providers prior to embracing their services.
This is set to offer both brokers and insurance companies a strong foundation amid the fast developing market. They should seek to support companies wade through the challenges that the GDPR will bring along.
GDPR Impact on Cyber Insurance
GDPR is expected to affect the cyber insurance sector in various ways such as;
There is likely going to be increased alertness especially because organizations shall be obligated to report cyber attacks. Witnessing cybercrime statistics will be a forewarning to companies that are yet to embrace data protection systems.
Need for Data Protection
To prevent hefty penalties, companies will require protection which will result in high interests in regard to cyber insurance.