Cybersecurity insurance is still a pretty new concept for many SMBs. It was initially introduced in the 1990s to provide coverage for large enterprises. It covered things like data processing errors and online media. Since that time, the policies for this type of liability coverage have changed. Today’s cyber insurance policies cover the typical costs of a data breach. Including remediating a malware infection or compromised account.
The increase in online danger and rising costs of a breach have led to changes in this type of insurance. No one is safe. Even small businesses find they are targets. They often have more to lose than larger enterprises as well. The cybersecurity insurance industry is ever-evolving. Businesses need to keep up with these trends to ensure they can stay protected.
The average cost of a data breach is currently $4.35 million (global average). In the U.S., it’s more than double that, at $9.44 million. As these costs continue to balloon, so does the demand for cybersecurity insurance. Companies of all types are realising that cyber insurance is critical. It’s as important as their business liability insurance. With demand increasing, look for more availability of cybersecurity insurance.
With the increase in cyberattacks has come an increase in insurance payouts. Insurance companies are increasing premiums to keep up.
In 2021, cyber insurance premiums rose by a staggering 74%. Insurance carriers aren’t willing to lose money on cybersecurity policies.
Certain types of coverage are getting more difficult to find. For example, some insurance carriers are dropping coverage for “nation-state” attacks. These are attacks that come from a government. Many governments have ties to known hacking groups. So, a ransomware attack that hits consumers and businesses can very well be in this category. In 2021, 21% of nation-state attacks targeted consumers, and 79% targeted enterprises. So, if you see that an insurance policy excludes these types of attacks, be very wary. Another type of attack payout that is being dropped from some policies is ransomware. Insurance carriers are tired of unsecured clients relying on them to pay the ransom. So many are excluding ransomware payouts from policies. This puts a bigger burden on organisations.
Just because you want cybersecurity insurance, doesn’t mean you’ll qualify for it. Qualifications are becoming stiffer. Insurance carriers aren’t willing to take chances. Especially in companies with poor cyber hygiene. Some of the factors that insurance carriers look at include:
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