Cybersecurity insurance remains a fairly new concept for many businesses. Initially introduced in the 1990s for large enterprises, it covered things like data processing errors and online media.

Since that time, the policies for this type of liability coverage have changed. Today’s cyber insurance policies cover the typical costs of a data breach. This includes remediating a malware infection or compromised accounts.

Cybersecurity insurance policies will typically cover the costs for things like:

  • Recovering compromised data
  • Repairing computer systems
  • Notifying customers about a data breach
  • Providing personal identity monitoring
  • IT forensics to investigate the breach
  • Legal expenses
  • Ransomware payments

Data breach volume and costs continue to rise. 2021 set a record for the most recorded data breaches on record. And in the first quarter of 2022, breaches were up 14% over the prior year.

No one is safe. Even small businesses find they are targets. They often have more to lose than larger enterprises as well. About 60% of small businesses close down within 6 months of a cyber incident.

The increase in online danger and rising costs of a breach have led to changes in cybersecurity insurance. As with technology generally, the insurance industry too is constantly evolving. Businesses need to keep up with current trends to ensure they can stay protected.

Below are some of the cyber liability insurance trends you need to know about.

Demand is Going Up

The global average cost of a data breach is currently $4.35 million. In the U.S., it’s more than double that, at $9.44 million. As breach costs continue to increase, so does the demand for cybersecurity insurance.

Companies of all types are realising that cyber insurance is critical. It’s as important as their business liability insurance. Without protection, they can easily go under often just from a single data breach.

With demand increasing, look for more availability of cybersecurity insurance. This also means more policy options, which is good for those seeking coverage.

Premiums are Increasing

With the increase in cyberattacks has come an increase in insurance payouts. Insurance companies are increasing premiums to keep up. In 2021, cyber insurance premiums rose by a staggering 74%.

The costs from lawsuits, ransomware payouts, and other remediation have driven this increase. like all their products, insurance companies aim to minimise losses on cybersecurity policies. This is why those policies are getting more expensive. At the same time they are becoming more necessary.

Coverage is Being Dropped

Certain types of coverage are getting more difficult to find. For example, some insurance carriers are dropping coverage for “nation-state” (government or government-sponsored attacks).

Many governments have ties to known hacking groups. So, a ransomware attack that hits consumers and businesses can very well be in this category.

In 2021, 21% of nation-state attacks targeted consumers, and 79% targeted business. Be wary of insurance policies that exclude these types of attacks.

Ransomware attacks are also being dropped by some. Between Q1 and Q2 of 2022, ransomware attacks increased by 24%.

Insurance companies are tired of poorly secured clients relying on them to pay the ransom. This is why many of them are excluding ransomware payouts from policies putting a bigger burden on organisations. In response, they need to ensure their backup and recovery strategy is well planned.

It’s Harder to Qualify

Just because you want cybersecurity insurance, doesn’t mean you’ll get it. The qualification process is becoming tougher. Insurance companies aren’t willing to take chances on companies with poor cybersecurity practices.

Some of the factors that insurance providers look at include:

  • Network security
  • Use of multi-factor authentication
  • BYO and other device security policies
  • Advanced threat protection
  • Automated security processes
  • Backup and recovery strategy
  • Administrative access to systems
  • Anti-phishing tactics
  • Employee security training

You’ll often need to fill out a lengthy questionnaire when applying for insurance. This includes several questions about your cybersecurity situation. It’s a good idea to have your IT provider help you with this.

This can seem like a lot of work that you have to do to qualify for cyber insurance. As you review the questions, your IT partner can identify security enhancements. Just like other forms of insurance, if you take steps to reduce risk, it can often reduce your premiums.

So, it pays to do a cybersecurity review before applying for cyber insurance. You can save yourself time and money. It can also fortify your defenses against cyberattacks.

Need Help Making Sense of Cybersecurity Policies?

Cybersecurity coverage and insurance applications can be complex. If you answer a question wrong, it can mean paying more in premiums than you should.

If you’re considering cybersecurity insurance, don’t go it alone. Give BIZC IT a call and schedule a consultation. We can explain the policy details and provide guidance.



Article used with permission from The Technology Press.