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Things you need to know about the Cybersecurity Insurance Market

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Cybersecurity insurance is still a pretty new concept for many small businesses. It was initially introduced in the 1990s to provide coverage 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. Including remediating a malware infection or compromised account. 

 

 

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 this type of insurance. The cybersecurity insurance industry is ever evolving. Businesses need to keep up with these trends to ensure they can stay protected. Here are some of the cyber liability insurance trends you need to know about.

Demand is Going Up

The average cost of a data breach is currently $4.35 million (global average). In the U.S., it’s more than double that, at $9.44 million. As these costs continue to balloon, so does the demand for cybersecurity insurance. Companies of all types are realizing that cyber insurance is critical. It’s as important as their business liability insurance. Without that protection, they can easily go under in the case of 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. Insurance carriers aren’t willing to lose money on cybersecurity policies. Thus, those policies are getting more expensive. This is at the same time as they are more necessary.

 

It’s Harder to Qualify

Just because you want cybersecurity insurance, doesn’t mean you’ll qualify for it. Qualifications are becoming stiffer. Insurance carriers aren’t willing to take chances. Especially on companies with poor cyber hygiene. Some of the factors that insurance carriers look at include: · Network security · Use of things like multi-factor authentication · BYOD and 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. 

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.

 

Cybersecurity coverage and insurance applications can be complex. If you’re considering cybersecurity insurance, don’t go alone We can explain the policy details and provide guidance.  Contact us today or book a discovery session

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