Insurance for social media is a sign of the times. Millions of small business owners, including content creators, store owners, online coaches and a myriad of other niches rely on their social media presence to find leads and drive revenue to their businesses. As a result, getting hacked and losing access to their social media accounts often has a detrimental impact - both financially and mentally.
Insurance and social media: A necessary combination
The impact of getting hacked on social media is often severe. National Cybersecurity Alliance estimates that 60% of small businesses shut down within 6 months of facing a cyber attack.
Despite spending years building digital storefronts on social media platforms like Instagram, the guarantee of security is non-existent.
Despite security best practices like using two factor authentication and strong passwords, on average an Instagram creator gets hacked every 10 minutes in the U.S alone, according to Notch's data.
The Wild West of Instagram hacking
Let’s dive a bit deeper into why insurance is so necessary for small business owners and social media creators. There are 4 main reasons:
- Instagram accounts are important revenue generators for business owners
- Instagram hacking is a widespread issue
- There is no security guarantee or safety net if an account gets stolen
- Brands prefer to work with insured creators
Instagram hacking on the rise
In the U.S in 2021 over 95,000 people reported that they lost cumulatively about $770 million to fraud initiated on social media platforms - double the amount reported the previous year.
And as mentioned earlier, Notch’s data shows that an Instagram creator gets hacked every 10 minutes in the U.S.
The impact of such events is significant. Flip Flop Wanderers, a popular travel account, described the blow of getting hacked:
“Instagram was our full time business, we had built a huge active community, we had several collaborations with brands and it was our only source of income - and suddenly it was all gone”.
Clearly, a solution that protects creators against such damages is urgently needed.
But isn’t Two Factor Authentication enough to protect Instagram accounts?
We have good news and bad news. The good news is that Two Factor Authentication (2FA) does help to secure social media accounts. It adds another layer of security - if a login is attempted from an unrecognized device or location, Instagram will request a special code sent by text or to your authenticator app.
The bad news is that no account is 100% protected, and many creators get hacked even with 2FA setup. All it takes for this to happen is a relatively sophisticated social engineering attack combined with a lapse in concentration. Just ask Jessica Wenjia or Elise Armitage.
So how exactly do hackers steal Instagram accounts?
The most common method hackers use to steal accounts is phishing, in which they send a message to Instagram users impersonating a legitimate source.
The victim then willingly enters in their login credentials, enabling the hacker to hijack their accounts. Frequently used fraudulent messages include bogus brand sponsorships and fake copyright infringement messages from Instagram. Check out the example below - this is a real phishing scam that led to full time creator Elise Armitage of @wtfab getting hacked:
All it takes is a moment of complacency for a creator's account - and their business - to be taken out of their hands. And as mentioned earlier, many creators, including @WTFAB, get hacked even with two factor authentication set up.
“Many creators, including @WTFAB, get hacked even with two factor authentication set up.”
It’s also important to note that it's not just big, full time creators at risk - everyone from micro influencers to small business owners are targets. Testament to this is the fact that over 60% of the victims of Instagram hacks we've interviewed had below 20,000 followers.
Lack of support for hacking victims
What happens if an account gets hacked and creators find themselves locked out? In the answer to this lies another key reason why Instagram insurance is so necessary.
Social media platforms don’t offer concrete assistance in such dire situations, and many victims end up paying hackers the ransom - with no guarantee of actually getting the account back after.
One victim we spoke to told us she contacted Instagram every day for three weeks without receiving a response, after her beauty salon's Instagram was hacked. The impact on her business was significant:
"Clients could no longer get personalized service, we likely lost a lot of business, and we lost all traction for a big giveaway we did. We also lost hundreds of followers." Unfortunately, this story is far from unique.
Those who don’t cave in to the hackers’ demands need to create a new account and start again from zero - a huge problem if the account was their primary source of income or key driver of sales. It takes months, sometimes years, to rebuild a following. Not only that, but getting hacked can cause reputation damage that may cause brands to steer away from future advertising deals with that creator. Which leads to our next point…
Brands prefer working with insured creators
Notch’s 2022 survey covering the impact of hacking on influencer marketing found that 76% of marketers are concerned by the possibility of an influencer’s account being taken down or hacked. 72% of respondents said their biggest concern was brand safety - specifically, being associated with an influencer’s account that would later be used to scam people.
Testament to these fears, 85% of marketers say they’d pay a premium to work with an influencer who’s insured their account.
"85% of marketers say they’d pay a premium to work with an influencer who’s insured their account".
For creators, social media insurance doesn’t solely provide a crucial support net in the event of a hack - it’s also a way to stand out to brands and potentially earn more money.
The rise of social media insurance
We’ve examined the “why”, now it’s time to look at the “what” and the “how”- what is social media insurance, and how does it work?
The core function of social media insurance, like Notch, is to cover creators against the loss of income caused by being hacked and losing access to their account.
Creators pay a monthly premium for an insurance policy, which is based on their estimated earnings, and if they get hacked, they receive daily payments for up to 90 days.
At the same time, to combat the lack of support from Instagram (Notch will be insuring accounts on other platforms soon), Notch helps creators actually retrieve their accounts, so they can get back to business as soon as possible.
Notch also provides 24/7 monitoring of creators’ social media accounts, scans the dark web to check if any credentials have been leaked, and sends instant alerts when any suspicious activity is detected.
TLDR; Notch’s insurance for Instagram creators provides:
- 24/7 monitoring and instant alerts
- Daily payouts following a hack
- Account retrieval
Social media insurance: A key tool for creators
With platforms like Instagram, a new way to earn a living has emerged in a big way, but foundational tools to support these businesses, like insurance, are yet to catch up. Yuanling Yuan of VC firm, SignalFire, captures the need to fill this vacuum:
“Layer three [of the creator economy], is ... the most exciting one ... and that is a layer where companies are built to treat creators as founders. Treating them as Small-Medium Businesses and giving them the tools and infrastructure to succeed, not just with creating content, but with also building out their business.”
With the livelihoods of content creators at the whim of increasingly sophisticated hackers, specialized insurance for creators is a key tool to help turn content into a sustainable business.
In the next year, as awareness of both the threat of hacking and the existence of specialized insurance for creators increases, it’s going to become common practice for savvy influencers and business owners to insure their prized assets - their social media accounts.