A confluence of factors has led to some noteworthy developments in the world of cyber insurance and security. Premiums are rising and providers are leaving, applications for cyber insurance are being declined more often, and some businesses have found that their claims are being rejected after a breach or cyber-attack. The backdrop to these events, is an increasing severity and number of cyber threats, and a global economy that has rapidly shifted to remote working and cloud-based ways of operating.
Many businesses, especially as they grow, get cyber insurance so that they have a cushion of protection in the event of a cyber-attack, but in today’s context, it has never been more important to ensure that:
- Your business has or remains eligible for cyber insurance, or at least has the added assurance of a robust cyber security posture.
- Your business can access as low an insurance premium as possible.
- That in the event of an attack or breach, your business’s claim is accepted.
In this blog, we explore cyber insurance, why it matters for your business, how to retain eligibility for it, and how to lower your premiums by enhancing your cyber security posture. In the next blog, we go into the considerations and practical measures for achieving this goal.
What Is Business Cyber Insurance?
Cyber insurance offers protection for businesses against the financial losses that can arise from cyber incidents, such as data breaches, hacking, and ransomware attacks. Cyber insurance plans can vary by business, sector and the provider, but generally they financially cover:
- Investigations of cyber incidents.
- Risk assessments for future cyber incidents.
- Revenue that is lost due to business interruption.
- Ransomware attack payments.
- Notifying customers of the incident and the provision of anti-fraud services to support them.
The financial costs of addressing a cyber incident mostly arise from the incident’s fallout rather than the incident itself, in the form of operational disruption and responding to the cyber incident. These costs often enter into five or six digit figures, but in recent years, a certain number have entered the territory of multi-millions of dollars.
Given the scale of these costs and the growing risk of cyber threats as a business grows, cyber insurance is increasingly becoming essential, as opposed to being a ‘nice to have’.
Why is Cyber Insurance Getting Costlier and Less Accessible?
As of 2020, the global cyber insurance market is estimated to be valued at $7.8Bn. Although in recent years it has been growing, it is also recalibrating due to the rise in cyber crime, the number of claims being made, and the payouts for these claims. This is prompting providers to charge higher premiums and even to stop providing cyber insurance, either partially, or totally in some cases.
On top of a revolutionary embrace of remote work, the rise in the number and severity of cyber threats, and difficulties in estimating the likelihood and impact of cyber incidents, means many insurance providers are continually revisiting how to underwrite their cyber insurance products. For the time being, this is contributing to higher premiums and more stringent eligibility requirements in the market.
In this turbulent time, it’s never been more important for businesses to have cyber insurance, but it’s also getting harder to access it, and to cash in.
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What Factors Cause Rejected Cyber Insurance Claims and Higher Premiums?
In a nutshell, the more risk that a business exposes an insurance provider to, the more likely it is the business will be rejected for coverage. If a business successfully acquires cyber insurance coverage but finds its claim has been partially or totally rejected, this typically arises from factors such as negligence or a breach of warranty; a business claims to have or agrees to have certain security measures in place under the policy, but it is found that they were not in place.
In cyber insurance, cybersecurity plays a key role in determining eligibility, and the premiums that are offered to a business. The variables a cyber insurance provider will consider here, include:
- The size and nature of the business, and the industry it operates within
- The types of data that it handles, and its sensitivity
- The regulatory environment that the business operates within
- Past cyber incident history
- Third-party vendor relationships
- Its cyber security posture; does the business have measures in place, such as multi-factor authentication, data backups, regular hardware and software updates, an incident response plan, and much more.
So what solution can help businesses to benefit from minimizing their cyber risks, while tapping into better premiums and an assurance that a claim will be honored by their provider? You may not be surprised to hear it from us, but it’s investing into cybersecurity!
Increase Eligibility and Lower Premiums by Investing in Cybersecurity
Investing into cybersecurity measures is an effective way to reduce the risks that your business could present to a cyber insurance provider, and is crucial for ensuring that your business is eligible for competitive coverage, premiums, and a pay-out in the event of an incident. In our next blog piece, we will cover how to implement a range of the key measures that cyber insurance providers look out for, enabling your business to maximize its protection, continuity, and peace of mind, while minimizing its risks.
CP Cyber: Industry Leaders in Cybersecurity
We’re established leaders in the provision of cybersecurity solutions to businesses of a range of sizes, including large enterprises. No two businesses are the same, and neither are our cybersecurity solutions. We bring the capability that you need to identify and address vulnerabilities within your business, and threats that could compromise it, and use these insights to secure your business. Don’t just take it from us, see what our customers have to say.
Want to create an industry-leading cybersecurity posture for your business? Book a meeting with us today. We’d be glad to meet you, listen to your needs, and offer empowering insights and guidance.
