Understanding the Importance of Cyber Insurance
When it comes to mitigating IT risks in your business, it takes more than having a traditional business continuity and disaster recovery plan in place. You have to think about unseen risks – including potential cyber security risks. Cyber security is the protection of computer systems and networks from information disclosure, theft of, or damage. A good cyber security plan incorporates many layers including your applications, cloud security, identity management, user education and more. Cyber security is not only preventative, it includes incident response, disaster recovery and business continuity planning.
However, no technology system is 100% free of security threats or risk. As such, many businesses have turned to Cyber Insurance as a way to further mitigate the potential financial impact of a cyber incident on their business.
With Cyber Insurance, businesses have coverage for different types of cyber incidents such as information loss, privacy remediation, credit card monitoring, customer notifications, and more.
The Increased Use and Popularity of Cyber Insurance
The cyber insurance market is expected to reach $20.6 billion by 2025. This is an increase of $7 billion, which was the figure for 2020. It’s also expected that the cost of cybercrime will continue to increase and reach around $10.5 trillion annually by 2025.
Currently, ransomware makes up about 75% of all cyber insurance claims (this was a significant increase from 2016 when it was just 55%). There has been no slowdown regarding ransomware activity, which means that the issue will likely continue as new technology vulnerabilities are found and exploited. One reason for the increase in ransomware is that businesses are becoming more willing to pay the ransom demands being made.
As a result, premiums for cyber insurance coverage continue to increase. Along with higher premiums, insurance companies have increased the security requirements that a business must have in place before the coverage will be granted. Insurance companies are asking for very specific security features to be in place such as offsite backups, multi-factor authentication, endpoint monitoring, vulnerability testing, complete IT policies, access control, and more.
Cyber Insurance Defined
Cyber insurance is a type of policy offered by insurance carriers to help mitigate the financial risk exposure of businesses by helping to offset the costs resulting in the damages and recovery after a cybersecurity incident occurs. It can also help protect your business from the costs of compliance fines, extortion payments, lawsuits, forensics, and investigations.
Until recently, purchasing cyber insurance was an extra type of liability insurance you could add to your standard policy. However, most traditional policies will only cover a breach of physical assets or business interruptions caused by cyberattacks. Today, though, cyberattacks can not only result in a temporary interruption in your business, in some cases businesses cannot recover due to the extent of the damage done.
What Cyber Insurance Covers
When purchasing cyber insurance, there are two main types of coverage:
- Third-party liability coverage
- First-party coverage
You can purchase one or both coverage options.
The cyber liability coverage you purchase will be very detailed, explaining exactly the different damages and incidents they will cover and the associated limits. This usually includes things like data loss insurance, ransomware, media coverage, privacy remediation, credit card monitoring, notification, system remediation, and more. Remember, though, that the products provided in the cyber risk portion of an insurance industry are changing. It’s important to know what your policy will and will not cover when you buy it.
Applying for Cyber Insurance
Once you ask your broker for cyber insurance coverage, you’ll be expected to fill in a comprehensive IT questionnaire. The insurance companies will want to know exactly what IT controls are in place, policies, various systems, and the information (data) you need coverage for. Unfortunately, not all insurance companies service all industries or business sizes. This is where your broker will help align you with the right insurance company and policy.
TruPoint and Cyber Insurance
At TruPoint, we help our customers through the cyber insurance process. From helping you complete applications, to answering technology questions, we make cyber insurance applications and renewals easier.
To ensure our customers have the best possible chance of acquiring and maintaining their cyber insurance coverage, TruPoint is doing three things:
- Secure, and Compliant, Work-From-Anywhere Platform: We’ve made it easy for businesses of all sizes to have enterprise-class information security controls at an affordable price.
- Complete IT Policies: We can help you implement a complete set of IT policies that meet cybersecurity essentials requirements.
- Compliance Monitoring: We are making it easy for our customers to prove compliance to their cyber insurance policy.
Have questions about Cyber Insurance and how your business might be at risk? Contact Us for a free assessment today.