Cybercriminals are increasingly targeting cloud-based tech companies as their popularity grows. SaaS companies collect and store data from thousands, if not millions, of clients, making them extremely vulnerable to cyber assaults.
Traditional business insurance doesn’t cover claims caused by cyber incidents, such as: Commercial General Liability (CGL) policies, Errors & Omissions (E&O) insurance, and other coverages.
The SaaS industry is undergoing significant changes, and the need for cyber insurance for it has never been greater. Sensitive data and vital company operations are at risk, as well as companies’ liability for security breaches on services provided by third parties. Tech E&O and Cyber Insurance coverage is required to keep safe in the tech market.
The Cost of a Breach
Average cost of an incident in 2021: $4.24 million (IBM Cost of a Data Breach Report)
Although small tech companies may receive smaller claims, an assault can still wipe out these organizations and their clients. An attack might be disproportionately destructive for a small company.
Remote work makes businesses more vulnerable. It introduces the risk of stolen credentials and more frequent business email breaches, which are difficult to detect and stop. On average, remote work-related breaches cost $1 million extra than other sorts of events.
The Power of Comprehensive Coverage
First-Party Coverage
- Hiring a computer forensics firm to discover the source of the breach
- Manage impacted clients by outsourcing assistance
- Repairing digital assets
- The cost of lost revenue due to system downtime
Third-Party Coverage
- Defense of a claim for negligence, professional errors, contract breach, and other such claims
- Indemnity coverage if you ultimately settle or are found liable
- Fines and payouts to affected customers
A Real World Example
In May 2020, Blackbaud Inc., a tech company, revealed that it had been the target of a ransomware assault. The company maintained a massive collection of PPI, including Social Security numbers, driver’s license numbers, passport numbers, personal health information (PHI), financial information, contact information, student I.D. numbers, and donor information for organizations involved in ‘social good.’
The hacker was successfully locked out of the system, but not before stealing data. They demanded Blackbaud pay a ransom to delete the stolen information, which the firm did. The event sparked a slew of class-action lawsuits against the tech company, with plaintiffs alleging negligent data handling. A court has so far agreed with these allegations and that Blackbaud is potentially on the hook for hundreds of millions of dollars.
A devastating financial damage like this can be avoided if you have Tech E&O and Cyber Liability Insurance. Ransomware is a significant danger, and everyone must be prepared. Today, your SaaS company needs Tech E&O and cyber liability insurance, no matter how big it is.