Cyber Insurance

Cyber Insurance

Jun 17, 2022

History shows Cyber insurance was used as a safety net in the past and allowed companies to avoid implementing cybersecurity, those days are gone.

The business environment today can be hazardous. Ransomware and data breaches are impacting companies around the world. These incidents are happening to large and small companies, municipalities, schools and non-profits.

It’s extremely dangerous to run a business without the protection that cyber insurance provides. But insurance carriers have tightened their requirements. They have made it difficult to obtain insurance unless a company can show a mature and layered cybersecurity program is in place.

This constant change is affecting cyber insurance pricing and requirements organizations need to maintain.

A quick snapshot of cyber insurance

In a nutshell, cyber insurance is a service that can help offset some of the costs associated with a data breach or cybersecurity compromise. A data breach or compromise can be costly for several reasons. Depending on the severity of the compromise, a company can incur major costs associated with:

  • Investigation: A company may have to bring in third parties and a forensic investigator.
  • Response: An organization’s incident response requires funding and resource allocation.
  • Remediation: Remediation efforts and post-recovery costs such as providing affected individuals with identity theft protection are all done at the cost of a company.

However, cyber insurance is designed to offset many of the costs listed above, at a lower price compared to what a data breach often costs the average company. While costs usually scale up depending on an organization’s size, small businesses are likely to benefit most from cyber insurance; the cost of cyber insurance is likely to be low and they have few resources to manage the costs of a breach.

Why are cyber insurance premiums rising?

Cyber insurance costs are increasing due to a steady increase of cybersecurity compromises, data breaches, and ransomware. Ransomware payouts have been a particularly sore subject for cyber insurance providers. As an example, last year’s accumulated ransomware payouts, surpassed the previous 10 years combined.

Cyber insurer requirements

In an attempt safeguard themselves, cyber insurers are introducing standards companies require before they can be covered, making cyber insurance harder to purchase. The requirements vary by cyber insurance companies but here are some of the most common ones.

  • MFA/2FA: Multi-factor authentication or two factor authentication is one of the more effective ways to prevent automated attacks from compromising accounts.
  • Firewall: Not all Firewalls are created equal. Intelligent Firewalls offer much greater protection and additional capabilities that reduce the risk of your network being exposed too easily.
  • AV/Malware detection: Again, not all antivirus tools are equal. A good one can help prevent and stop malware or other forms of malicious code or software from making their way into your environment.
  • EDR: Endpoint detection and response (EDR) tools can help organizations detect anomalous behaviour, unauthorized entry, allowing the company to react quickly and minimize the damage done by a potential compromise.

How can you reduce cyber insurance premiums?

Cyber insurers are also incentivizing companies to further bolster and invest in their cybersecurity posture by offering discounts on insurance costs. This is a good opportunity for organizations to reap multiple rewards by investing in solutions and technologies that are quickly becoming necessary in a threat-filled environment.

While the discounts vary, as well as what triggers discounts, organizations should look for detection and response solutions, endpoint protection solutions, ransomware protection, and additional asset and network monitoring tools. So, when thinking of taking cyber insurance make sure you qualify:

We recommend the following:

Make sure you qualify: If you don’t have an antivirus, firewall, or implemented MFA/2FA across your organization, start there. As you start the research process, make sure you meet all the requirements a cyber insurer lists.

Consider an XDR solution: An extended detection and response (XDR) are a cloud-first EDR that provides similar detection and response services as an EDR but also incorporates A1, telemetry and network information that provides a stronger overall picture of an organization’s security posture. In addition to bolstering an organization’s security, this may also reduce the monthly cost of cyber insurance.

MTR solutions can help with cyber insurance: Organizations can now partner with vendors who offer managed threat response services (MTR). MTR solutions vary by company but commonly provide 24/7 cybersecurity support, give access to a SOC (security operations centre), and engage in proactive threat hunting and threat intel to stop attacks and react quickly in the face of a compromise.

If you are in doubt, contact us for further advice.

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