Internet-born attacks are becoming a serious issue. Did you know that reported cyber theft increased by 68% from 2020 to 2021?
Today, in a post-pandemic world, companies are at even greater risk because of an increased digital workload. The rise of work from home means companies are more reliant on internet-based information systems than ever. Preparation for cyber threats is a must.
The good news is that cyber insurance providers have responded by offering wider protection. Modern cyber insurance coverage is closer to general business insurance. You just have to know what to look for.
Interested in learning more? Then you’ve come to the right place. Read on and find out what you need to know.
What Exactly is Cyber Insurance?
Cyber insurance is an insurance policy that protects businesses and organisations from damages caused by cyber-attacks. Like life or car insurance, cyber insurance has its own set of prerequisites that must be met in order to qualify.
What Kind of Damages Does Cyber Insurance Cover?
Cyber insurance typically covers two types of damage. They are first-party damages and third-party damages. Let’s take a look at both.
First-Party Damages
First-party damages are financial damages caused by a direct attack. Direct attacks are things like data theft, data damage, and DDoS attacks. First-party damages are covered by almost every cyber insurance policy.
A first-party cyber insurance plan will help your business recoup the costs of everything that comes with a direct attack. This includes things like damaged hardware and software, lost data, and any lost business revenue. Let’s look at an example.
Suppose a DDoS attack overwhelms your servers and causes all of your business’s on-site hardware to malfunction. Without first-party insurance, you’ll be stuck paying for the full cost of replacing your business’s hardware infrastructure. These costs are also in addition to any lost data or downtime for your business.
Third-Party Damages
Third-party cyber insurance plans cover the financial damages caused by a person suing your company because their personal information was stolen. Expenses like legal fees, settlements, and lawsuits are all taken care of.
For example, data breaches can result in your business being out of regulatory compliance. Failure to meet regulatory standards can be very costly and can put you at risk of going out of business. A third-party insurance plan will cover the costs that come with breaking compliance.
Third-party cyber insurance is especially important for businesses and organisations responsible for a greater amount of personal information.
What About Ransomware?
Ransomware is a very popular and frequent form of cyber attack. A ransomware attack gets carried out with the intention of holding critical information or data hostage in exchange for some sort of currency, usually Bitcoin.
While most cyber insurers will cover ransomware attacks, there are some that will not. This is because giving in to the demands of a ransomware attack does not guarantee the information held hostage will be returned.
Ransomware can affect all business types but currently the banking, healthcare, and retail industries are most affected. If your business is in any of these three industries then it is highly advised to consider a policy centred around the possibility of a ransomware attack. Prevention is the best way to deal with ransomware attacks.
How Much Does Cyber Insurance Cost?
The cost of cyber insurance varies but is most affected by the size of a company, how much data must be protected, and how well they protect their information infrastructure.
Larger companies bring in more money and are therefore bigger targets for cybercrime. This means they will be paying a larger insurance premium as a result. Generally speaking, large companies also have more data that must be protected than smaller companies and will pay more than companies with less data to protect.
Companies that do a good job of protecting their information infrastructures will pay a smaller premium than those that don’t. Insurers prefer clients who act responsibly and are way more likely to deny clients who do not.
With all of that being said, the average cost of cyber insurance in the UK seems to be skyrocketing. Regardless of cost, there’s no better time than now to get insured.
The Changing Landscape of Cyber Insurance
Major increases in cyber-attacks are causing insurers to be much more stringent in how they hand out policies. Acquiring cyber insurance is no longer easy to apply for and qualify for. Companies must now prove they are not a liability in order to get cover.
Prerequisites for Cyber Insurance
There are several prerequisites a company must meet in order to qualify for a policy. Let’s go over a few of them in detail.
Risk Assessment
The first thing a business must do is undergo a full risk assessment. Risk assessments identify and evaluate a company’s assets to properly gauge its level of risk. Servers, cloud resources, and user endpoints are all factored into the risk assessment. The more of these assets a company has the more detailed an assessment must be.
For example, large multi-national corporations like Amazon and Microsoft require very long and detailed risk assessments. This is because they are companies with large amounts of assets, making them prime targets for a cyber attack. Last year, over a quarter million of Microsoft’s global servers fell victim to a large-scale data breach.
Information Security
No company that handles cyber insurance wants to deal with a client that is careless with their information security. Every business or organisation looking to have cyber insurance must meet some basic information security standards.
To meet the minimum requirements, all software and technology must be actively defended. This includes things like strong firewall protection and having the latest antivirus software updates as soon as they are available. All business data and information should also be backed up.
User Access Management and Multi-Factor Authentication
In addition to the above, there must be a protocol in place that properly enforces user access management. User access management determines who is and is not allowed access to certain information in a company’s technology network. Without proper access management, a business’s employees become information security liabilities.
Multi-factor authentication is an added layer of protection for user access management. It confirms the identity of an individual before they log in.
Multi-factor authentication is an example of an information security concept called Defence In Depth. DID uses a multi-layer approach to protect information systems.
Let’s look at a use case. Suppose the usernames and passwords of your business’s information platforms are stolen. Without MFA, a hacker would have complete control over your business’s most important data.
A multi-factor authentication tool would immediately block any sign-in that isn’t confirmed. A text or email is sent with a passcode that verifies each sign-in attempt. False attempts are thus prevented from gaining access and can get handled with ease.
How To Prepare for the Evolving Landscape of Cyber Insurance
Cyber and ransomware attacks are causing cyber insurance providers to pay out more money than ever before. This is the main reason companies are becoming so stringent with their qualification process. To prepare for the future of cyber insurance, companies should focus on maintaining good information security protocols.
What About After My Business is Insured?
Qualifying for a cyber insurance policy does not mean your work is done. On the contrary, the work is only just beginning.
The health of your company’s information infrastructure must be maintained even with protection. This is because cyber threats are constantly evolving and finding new ways to compromise information networks. Not keeping up with evolving threats is a recipe for disaster.
To keep your business afloat your cyber insurance provider will work alongside you to uphold a proper standard. They are incentivised to do this not only to keep your business as a client but also to maximise the likelihood of not paying a policy out.
The Bottom-Line: Don’t Miss Out on Cyber Insurance
Cyber-attacks are on the rise and don’t seem to be slowing down any time soon. In response, insurers are requiring businesses and organisations to pay more attention to the well-being of their information technology. Because of these factors and more, having a cyber insurance policy to protect your company is more important than ever.
Are you interested in attaining cybersecurity frameworks and certifications? We’ve got you covered. Contact us today!