Cybersecurity Insurance: What Cyber Insurance Covers and the Requirements
From 2020, the entire globe seemingly got into a new era of cyberattacks. Cyber risks became more prevalent as the bad actors looked for possible loopholes to access organizations’ data as companies adapted to remote working. There was a significant acceleration of breaches, ransomware, phishing, and other social engineering attacks on small and large companies and almost all industries from technology, manufacturing, healthcare, and more. A recent study revealed that more than 60% of businesses were victims of ransomware attacks in 2020 as cyberattacks took advantage of the lax security controls.
With the rising cases of cyberattacks, businesses have found cybersecurity insurance to hold much value in recent years. The purchase of cyber insurance policy is now on an upward trajectory from businesses of all sizes, as startups to Fortune 500 companies look to it as a solution to mitigate potential losses in case of a breach. This insurance cover protects against the massive losses associated with data breach incidents that can take weeks or months to recover. In fact, a report by Index Market Research shows that the value of the global cyber market will be approximately $22.5 billion in 2030, which is a significant rise from $4.3 billion in 2018.
Read on for more insights.
Cyber insurance, also called cyber liability insurance or cybersecurity insurance, helps protect companies experiencing financial losses from a cyber incident such as data breaches, business interruptions, or network damage. Cyber liability insurance can help your business get back into normal operations.
There are several reasons why organizations should prioritize cybersecurity insurance. Some of the main reasons include:
When purchasing cyber liability insurance, you need to know what each policy covers. Most cyber insurance providers classify their policies into two categories to meet the demands of their clients. You can either choose the first or third-party coverage. First-party cyber insurance covers the damages you incur after a cyberattack, such as the cost of data recovery, lost revenue, repairs, and more. On the other hand, third-party cyber insurance covers the legal expenses from negligence claims, privacy lawsuits, and other similar suits. If you choose a comprehensive cybersecurity liability cover, it should cater to both first and third-party damages.
These damages primarily encompass damages to your organization resulting from theft or loss of data. You can have everything covered with a typical plan, from insider threats, cybercriminals attacks, and accidents like hardware malfunctions or power surges. A first-party cyber insurance policy can cover the following costs:
These damages include all the claims made against your organization after a security breach. If cyber attackers managed to steal personal information or sensitive data, your company might be in trouble with government agencies, business partners, and customers. Third-party insurance will play a crucial part in covering your legal defense costs. This can be in cases such as:
Some things may be essential to your organization, but they are not part of cyber liability insurance. Therefore, you need to understand what a cyber insurance policy covers. Some of the cyber risks that aren’t part of cybersecurity insurance include:
A few years back, companies found it easy to obtain a cybersecurity insurance policy. However, the recent rise in sophisticated cyberattack incidents has made insurers introduce minimum requirements for organizations seeking this policy. Most insurance companies will carry out an underwriting procedure that will involve a cyber insurance risk assessment. Depending on your company size, this process can involve an in-depth analysis over several weeks or just a simple questionnaire by a cybersecurity firm. Your business should meet the basic IT security standards to qualify for cybersecurity insurance.
Below are some of the requirements the insurers may have to approve for you to qualify for cybersecurity insurance:
When you have a next-generation firewall, you introduce inline security features such as intrusion prevention, threat intelligence, application awareness, and control. These measures ensure that everything gets scanned for possible threats in real-time. Note that for your business firewall to be a next-gen firewall, it should have:
Strong Password Policy
With a strong password policy, you force employees to employ strong passwords. This is a crucial part of a company’s cybersecurity protocols to protect your accounts from getting into the wrong hands.
This is the process of securing all your endpoints on devices such as laptops, mobile phones, and desktops. Essentially, this is an anti-malware, anti-virus, and anti-ransomware software.
Offsite and Local Backups
You can store your applications, data, and systems to a reliable local drive or offsite. Local backups help to recover data quickly since you depend on an internet connection, and you know the location of your data. However, a physical disaster can lead to the destruction of your local backup. Therefore, having an offsite backup helps protect your applications and data in case of a breach, theft, or disaster.
MFA is a login feature that protects against identity-based attacks by confirming your identity when signing in. With MFA, you have an added verification process while login in so that only authorized persons can access an account.
Keeping your systems up to date is crucial to preventing cyberattacks. This ensures that you have the latest security updates to help you prevent new malware threats that amount to about 230,000 each day. Besides, new vulnerabilities get patched every time, making it easier for a cybercriminal to gain access to your software when your programs aren’t updated.
Generally, you will need to have certain cybersecurity measures to obtain cyber liability insurance. One of the most effective ways of ensuring that you have the best measures in place is to work with a reliable managed IT service provider such as MicroXpress Inc.
With the high prevalence of data breaches or cyberattacks, no business is immune to these attacks. Therefore, cybersecurity insurance will help to mitigate against the impacts of a cyberattack, which will ensure business continuity. However, before buying a cyber-insurance policy, you also need to have the necessary security mechanisms to prevent possible risks from malicious actors.
At MicroXpress Inc, we can provide the necessary assistance in ensuring that you have cybersecurity measures in place. We have the expertise and skills required to review your systems and audit your policies. With the best cybersecurity practices in your business, you will mitigate the risks of an attack as well as secure cybersecurity insurance. Reach out to us today for more consultation on how we can help.
Thanks to our colleagues at Orbis Solutions in Las Vegas for their insights into this article.
MicroXpress has been providing professional IT services to Central PA businesses since 1989. Watch this brief video to find out the Top Five Reasons so many local businesses are switching to MicroXpress for their IT support.