Many small and medium-sized enterprises (SMBs) are still unfamiliar with cybersecurity insurance. It was first introduced in the 1990s to cover large businesses, providing protection from online media errors as well as data processing errors.
Policyholders of cyber insurance have seen their coverage expand over the years. Today's policies cover all costs related to a data breach - including remediating malware attacks or compromised accounts.
Cybersecurity insurance policies cover the following expenses:
- Recovering Compromised Data
Are you trying to recover compromised data? There may be several steps that you can take.
- Computer Repair
- Notifying Customers About Data Breach
- Notifying customers about data breaches
Alerting clients when breaches have occurred
- Personal identity monitoring.
- IT forensics can be employed to detect breaches in data security.
- Legal Fees
- Ransomware Payments
Data breach costs and volume continue to climb. 2021 was the year with the most data breaches, and in 2022 they increased by 14% compared to the prior quarter.
No business is safe from cyber attacks. Even small businesses can be vulnerable, often suffering greater losses than larger firms; 60% of small business owners cease operations within six months after a breach.
Due to the rising cost of breaches and online threats, cybersecurity insurance has undergone drastic transformations. To remain secure, businesses must stay abreast of all emerging trends.
These are the top cyber liability insurance trends you should be watching out for.
The Demand Is Growing
The global average cost of data breaches is $4.35 Million; in the United States alone it's nearly twice that amount at $9.44million. With these costs spiraling out of control, cybersecurity insurance demand is on the rise at an alarmingly rapid pace.
Cyber insurance is becoming an integral component of every company. It's just as essential as business liability coverage if there's even one data breach that puts a business out of business. Without cyber insurance, companies could easily go bankrupt due to a single breach in security.
With the rise in cybersecurity insurance demand, you will see more providers. This opens the door for policy shoppers to a wider selection of policies - which is great news for anyone searching for protection.
Insurance premiums are rising
Insurance payouts have gone up due to cyberattacks. To stay ahead of the curve, insurance companies are raising premiums - cyber insurance premiums rose by 74% in 2021 alone.
Due to rising costs associated with ransomware payments, lawsuits and other remediation, insurance companies are unwilling to lose money on cybersecurity policies. Therefore, these policies have become both costlier and more important at the same time.
Some Coverages Are Becoming Extincta
Finding certain types of coverage has become more challenging. Some insurance companies are now declining coverage for "nation state" attacks - these are attacks from government authorities.
Many governments have links to cybercriminals. Ransomware attacks that affect consumers or businesses could fall under this category.
21% of country-state attacks against consumers were directed towards 2021, while 79% of attacks against enterprises targeted businesses. If your insurance policy does not cover these types of attacks, be especially wary.
Ransomware is another type of attack where policies are becoming less favorable. Between Q1 and Q2 2022, ransomware attacks have grown by 24%.
Insurance companies are fed up with clients who can't pay ransomware payments. Many policies now exclude ransomware payouts, placing an increased burden on organizations. Therefore, organizations must devise an effective backup and recovery plan in order to remain compliant.
Qualification for insurance has become more challenging
While you don't need to be an expert cybersecurity practitioner in order to qualify, qualifications are becoming more stringent. Insurance companies are becoming less willing to take chances, especially with companies with poor cyber hygiene practices.
Insurance companies take into account these elements:
- Network Security
- Multi-factor authentication is often employed for network security.
- BYOD policies and device security guidelines
- Advanced Threat Protection || Superior threat protection.
- Automating security processes
- Backup and recovery strategy
- Administrative access to system systems
- Anti-phishing Techniques
- Training for Employees in Security
When applying for insurance, you will often have to fill out an extensive questionnaire. This typically asks several questions regarding your cybersecurity - which is a wise practice.
Although it may seem like a lot of effort, you must complete these steps in order to be eligible for cyber insurance. Your IT partner can identify security enhancements after reviewing your questions, just as with other types of policies, taking steps to reduce risk can help lower premiums.
Before applying for cyber insurance, it's wise to conduct a cybersecurity review. Not only will this save time and money, but it can also help bolster your cyberdefenses.
Need Help Understanding Cybersecurity Policies?
Understanding complex insurance applications and cybersecurity coverage can be overwhelming. Making mistakes could result in paying hundreds more for premiums if questions are answered incorrectly. So be sure to get it right the first time!
Don't go it alone when looking into cybersecurity insurance. Reach out to us to arrange a consultation and we will explain the policy and provide assistance.