The idea of cybersecurity insurance is a relatively new topic for many Small to Medium sized businesses. We first saw it come around in the 1990s offering protection to larger enterprises. It included topics like online media and data processing issues. Since then, a lot has changed. Let’s dive into what’s different in the cybersecurity insurance market in 2023?
For one, the policies for this kind of liability coverage have evolved. Current cybers insurance covers the typical costs that come due to a data breach. This includes remediating a malware infection or compromised account.
Cybersecurity Insurance plans usually pay for expenses such as:
- Restoring compromised data
- Computer system repairs
- Notifying customers of data breach
- Personal identity monitoring
- Investigations into the breach
- Legal expenses
- Ransomware payments
Volumes of data breaches and their costs are increasing. Nobody is safe. Small businesses are also being targeted more and more. They frequently stand to lose more than larger businesses do. After a cyber attack, 60% of small businesses close down within six months.
Because of the uptick in online dangers and rising costs of a breach, this type of insurance has seen a lot of changes. The market for cybersecurity insurance is constantly evolving. In order for businesses to stay secure, they need to keep up with these changes.
Here are a few developments in cyber liability insurance that you should be aware of:
Demand is Increasing
As of now, the average global cost of a data breach is $4.35 million. In the U.S. alone, the average cost is almost double that at $9.44 million. The need for cybersecurity insurance goes up as these costs rise.
Companies of all sizes are becoming more aware of how important cyber insurance can be for business. It is as essential as their business liability insurance. They can easily go under after only one data leak if they didn’t have that protection.
As the demand rises, you can expect more cybersecurity insurance to become more available. Even those who have insurance can expect some more added policy options.
Premiums are on the Rise
As you can expect, with the increase in cyberattacks means an increase in insurance payouts. To keep up, insurance companies are raising their rates.
This increase is driven by the costs of lawsuits, ransomware settlements, and other cleanup. Insurance companies are unwilling to suffer financial losses from cybersecurity policies. Consequently, the cost of those polices is increasing. They are also more necessary at the same time.
Losing Certain Coverages
Certain coverage options from the past are becoming increasingly harder to find. For instance, several insurance companies no longer offer protection against “nation-state” attacks. These are attacks that a government launched.
Many governments have connections to hacking groups. Therefore, a ransomware attack that targets both consumers and businesses may fall under that category.
Harder to Qualify
You are not eligible for cybersecurity just because you want it. The requirements are getting more stringent. Insurance companies are reluctant to incur risks. Especially businesses with inadequate online safety.
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
When applying to insurance, you often have to complete a long questionnaire. There are various questions regarding your cybersecurity positioning. Getting help from your IT provider is an excellent source for this.
Need Assistance Understanding Cybersecurity Policies?
We know that cybersecurity insurance applications can be complex. It’s possible to find yourself paying hundreds more in premiums than you should if you answer a question wrong. Knowing what’s different in the cybersecurity insurance market is step one.
If you’re considering applying for cybersecurity insurance, don’t go at it alone. Give us a call and schedule a consultation. We can explain the policies and provide detailed explanations.
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STG IT Consulting Group proudly provides IT Service in Greater Los Angeles and the surrounding areas for all of your IT needs.