Recent Update from the Cybersecurity Insurance Market

Cybersecurity insurance is still a fairly new concept for many SMBs. It was originally introduced in the 1990s to provide insurance coverage to large companies. It covered things like data processing errors and online media.

Since then, policies for this type of liability insurance have changed. Today's cyber insurance policies cover the typical costs of a data breach. This includes fixing a malware infection or a compromised account.

Cybersecurity insurance policies cover the cost of things like:

• Recovery of compromised data
• Repairing computer systems
• Notifying customers of a data breach
• Personal identity monitoring
• IT forensics to investigate the breach
• Legal costs
• Ransomware payments
  
  

The scope and cost of data breaches continues to rise. 2021 set a record for the most data breaches recorded. And in the first quarter of 2022, breaches increased 14% year-over-year

No one is safe. Even small businesses are targets. They also often have more to lose than larger companies. About 60% of small businesses shut down within 6 months of a cyber incident.

The increasing online threat and rising cost of a security breach have led to changes in this type of insurance. The cybersecurity insurance industry is constantly evolving. Businesses need to keep up with these trends to make sure they are protected.

Here are some of the trends in cyber liability insurance from Onyx IT team you should know about.

Demand Is On the Rise

The average cost of a data breach is currently $4.35 million (global average). In the U.S., they are more than double that at $9.44 million. As these costs rise, so does the demand for cybersecurity insurance.

Businesses of all types are realizing that cyber insurance is critical. It is just as important as their business liability insurance. Without this protection, they can easily go under in the event of a single data breach.

As demand increases, look out for a wider range of cybersecurity insurance policies. This also means that there are more insurance options, which is good for those looking for coverage.

Premiums are On the Rise

As cyberattacks increase, so does the number of insurance coverage options. Insurance companies are raising premiums to keep up. In 2021, cyber insurance premiums increased by an incredible 74%

The cost of litigation, ransomware payouts, and other remediation has caused this increase. Insurers are not willing to lose money on cybersecurity policies. As a result, these policies are becoming more expensive. At the same time, they are becoming more necessary.

Certain Coverages are Being Dropped

Certain types of coverage are becoming harder to find. For example, some insurers are dropping coverage for "nation-state" attacks. These are attacks that originate from a government.

Many governments have ties to known hacker groups. So a ransomware attack that hits consumers and businesses may very well fall into this category.

In 2021, 21% of attacks from governments targeted consumers and 79% targeted businesses. So if you see that an insurance policy excludes these types of attacks, you should be very careful.

Another type of attack that is no longer included in some policies is ransomware. Between Q1 and Q2 2022, ransomware attacks have increased by 24%

Insurers are tired of unsecured customers relying on them to pay the ransom. As a result, many are excluding ransomware payouts from their policies. This places a greater burden on businesses. They need to make sure their backup and recovery strategy is well planned.

It’s Harder to Qualify

Just because you want cybersecurity insurance does not mean you qualify for it. The requirements are becoming more stringent. Insurance carriers are not willing to take a chance. Especially not for companies with poor cyber hygiene.

Some of the factors insurance carriers are looking at are:

• 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

When you apply for insurance, you often have to fill out a long questionnaire. This contains several questions about your cybersecurity situation. It's a good idea to get help with this from your IT provider.

This may seem like a lot of work to complete in order to qualify for cyber insurance. As you go through the questions, your IT partner can identify security enhancements. As with other insurance, you can often lower your premiums if you take steps to mitigate risk.

So it pays to do a cybersecurity review before you apply for cyber insurance. You can save yourself time and money. It can also help you strengthen your defences against cyberattacks 

Need Help Interpreting Cybersecurity Policies?

Cybersecurity coverage and insurance applications can be complex. Answering one question incorrectly can mean you pay hundreds more in premiums than you should.

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

Article used with permission from The Technology Press.