The increase in cyber-attacks in very recent times has had a wide-ranging impact on businesses around the world, from interruptions to business operations, financial losses, and regulatory consequences. As a result, cyber insurance has become a necessary investment for businesses to safeguard against potential losses and damages.
However, the severity and increase in damages resulting from cyber threats have led to a significant hike in cyber insurance premiums. Consequently, businesses may have to either purchase new insurance policies at higher rates or anticipate a rise in their existing policy costs. However, 3 factors influence the cyber insurance costs for insurers and businesses.
#1: Business size
The size of your business is a significant factor that can impact your cybersecurity insurance premiums. Typically, larger businesses will pay higher premiums than small businesses. This is because larger businesses are more likely to be targeted by cybercriminals due to greater numbers of systems, devices, and users that increase their attack surface and complexity of their IT environment. As a result, insurance policies are tailored according to the size and complexity of the business.
To mitigate the impact of business size on your insurance premiums, it's important to conduct a thorough risk assessment. This will help you achieve visibility across your attack surface, identify potential vulnerabilities in your IT infrastructure and determine the level of coverage you need to adequately protect your business.
#2: Industry and level of risk
The industry you operate in and the level of security risk associated with your business can also impact your cybersecurity insurance premiums. Certain industries, such as healthcare and finance, are more likely to be targeted by cybercriminals due to the sensitive nature of the data they handle.
Insurers don't just consider the frequency of cyber-attacks when setting their policies. They also factor in the costs associated with such attacks, particularly in high-risk sectors like finance. As a result, businesses operating in these industries can expect to pay higher premiums for their insurance.
To mitigate the impact of your industry on your insurance premiums, it's important to implement strong security measures and protocols to protect your sensitive data. This can include measures such as encryption, firewalls, and multi-factor authentication.
#3: Lack of security measures and cybersecurity history
The security measures you have in place to mitigate cyber risks and your history of cyber incidents can also impact your cybersecurity insurance premiums. Insurance companies will assess the level of security measures you have in place, such as firewalls, antivirus software, and employee awareness training. Additionally, your history of cyber incidents can impact your premiums, as insurance companies will view businesses with a history of cyber-attacks as a higher risk.
To mitigate the impact of security measures and cyber incidents on your insurance premiums, it's important to implement strong security protocols and conduct regular employee training. Additionally, businesses should ensure they have a comprehensive incident response plan in place to mitigate the impact of a cyber-attack.
How to lower insurance premiums
Organizations often customize their policies based on the risk factors they want to protect against. For instance, insurance coverage for advanced cyber-attacks is more expensive than coverage for common cyber threats such as ransomware attacks, phishing attacks, or employee identity theft.
Insurers require companies to have a basic level of cybersecurity measures in place to qualify for their policies. This includes endpoint protection, which is more advanced than standard antivirus software, and multi-factor authentication (MFA), which is essential for safeguarding a company's accounts and credentials. Most hacking-related data breaches happen due to weak passwords or stolen credentials, allowing cybercriminals to access systems and steal sensitive information or personal data.
To adequately protect your business against cyber threats and reduce your insurance premiums, it's important to conduct a thorough risk assessment. A risk assessment will help you identify potential vulnerabilities in your IT infrastructure and determine the level of coverage you need to adequately protect your business.
A risk assessment should include an evaluation of your IT infrastructure, as well as an assessment of your data privacy and security policies. Additionally, a risk assessment should include an evaluation of your employee training programs, as well as an assessment of your incident response plan.
To lower your cybersecurity insurance premiums, it's important to implement regular employee training to ensure all employees are aware of potential cyber threats and how to mitigate them. In fact, many cybersecurity insurance providers expect all employees to have completed security awareness training before they will agree to cover your business.
Finally, businesses should ensure they have a comprehensive incident response plan in place to mitigate the impact of a cyber-attack. This plan should include protocols for identifying and containing the attack, as well as processes for restoring data and systems.
Keep your cyber liability insurance affordable and stay secure
Cybersecurity insurance is a necessary investment for businesses of all sizes. However, many businesses are unaware of the hidden costs associated with this type of insurance. By understanding the factors that drive up your cyber insurance premiums, you can make informed decisions about your cyber insurance coverage and ensure your business is fully protected against cyber threats. The ThreatAdvice managed security providers have the solutions and expertise to keep you secure and qualify you for the most appropriate cybersecurity insurance.