A cyber insurance captive is a subsidiary created by a parent company specifically to handle the cyber risks and insurance needs of that company and its affiliates. For businesses facing increasing cyber threats, such as ransomware, data breaches, and other cyber attacks, using a captive can offer a tailored approach to cyber liability insurance, giving more control over policies and risk management.
Benefits of a Cyber Insurance Captive:
Customized Cyber Coverage: Captives allow companies to design bespoke cyber insurance policies that cover specific risks, such as data breach insurance, ransomware insurance, or network security and privacy liability insurance.
Cost Control: By using a captive, businesses can potentially lower their cyber insurance costs by retaining profits and reducing reliance on commercial cyber insurance companies or brokers. Captives also offer better insight into pricing and claims, allowing for more stable cyber insurance pricing.
Increased Flexibility: Companies can set their own cyber insurance coverage limits to match their risk profiles. This can be especially useful for small businesses that need cyber security insurance tailored to their specific threats.
Better Risk Management: A captive can offer more proactive cyber risk management, helping the parent company mitigate risks before they become costly claims. This includes protecting against business interruption and third-party liabilities tied to cyber inciden
How Cyber Captives Work:
Instead of purchasing a commercial cyber liability insurance policy from top cyber insurance companies or brokers, companies use a captive to insure their cyber risks. The captive is fully owned by the parent company and handles the cyber insurance business, managing everything from underwriting to claims. This can provide a significant advantage for businesses needing more control over claims related to cyber security breaches, data breaches, and ransomware incidents.
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