The cyber insurance market is changing fast, and conditions are getting tougher as the market hardens for the first time in its 15-plus year history. While some organizations already have some cyber insurance coverage, many are finding the bar for renewal is getting higher as capacity shrinks — and premiums are going up.Good cybersecurity can help with cyber insurance in multiple ways: from facilitating access to a policy approved through underwriting to lowering premiums and reducing the likelihood of making a claim.
Why have cyber insurance
Cyber insurance, also commonly known as cyber risk insurance and cyber liability insurance, protects you from the impact of cybercrime (though not from the crime itself). Broadly speaking, there are three main benefits to having cyber insurance:
- Financial. The insurance covers costs in the event of a cyber incident
2. Operational. The insurance team provides immediate access to experts in the event of an incident, including IT forensics specialists, privacy lawyers, and PR pros
3. Peace of mind. Having cyber insurance gives confidence to your customers, partners, suppliers, and employees that you are prepared and covered should a cyber incident strike.
While cyber insurance claims can be triggered by a wide range of incidents, the most frequent cause of claims according to NetDiligence’s Cyber Claims Study 2020 are four common threats: ransomware, social engineering, hackers, and business email compromise (BEC)*.
What cyber insurance covers
Cyber insurance covers the costs incurred as a result of a cyberattack. While individual policies vary, they typically cover:
Forensic analysis to identify the attack source
Ransom demands and specialists to handle ransom negotiations
Costs to regain access or restore your data from backups or other sources
Public relations services
Notification of clients and/or regulatory bodies
Credit monitoring services for affected individuals
When sourcing policies and comparing costs, it’s worth noting that the costs of business interruption, such as loss of income or additional costs of work due to the cyberattack, are included in some policies, but not others.In the event of a cyber incident, the insurance provider will step in and provide experts to help deal with the situation.
For a ransomware attack, they will typically:
Appoint a consultant to advise on the handling and negotiation of the ransom demand
Identify the lowest cost way to restore the data (ransom payment, backups etc.)
Bring in the necessary experts to deal with the issue
Cyberattacks are fuelling cyber insurance
A recent survey of cyber insurance brokers and cyber underwriters from around the world by Advisen and Partner Re provides insight into the top drivers of new or increased cyber insurance sales*. It is perhaps unsurprising that the top two factors behind the take up of cyber insurance are news of cyber-related losses experience by others and experiencing a cyber-realated loss. However, in third place is board or senior management demand. This high level of demand from leadership teams reflects the cross-organization devastation that a major cyber incident can cause. Defending against the implications of a cyberattack is now a mainstream business issue, not just an IT challenge.