Cyber Security & Cyber Risk Applications & Audits
As cyber-attacks continue to increase in sophistication, frequency, and severity, cybersecurity insurance is becoming a necessity for businesses to manage IT risk in the event of a cyber security incident. Cyberattacks are no longer an ambiguous incident that only big corporations need to consider—they are an active threat to all organizations, including small to mid-sized businesses. Surviving a data breach will be costly, and without cyber insurance, many small businesses will not be able to continue after an event occurs. Having cyber insurance means you’ll be able to recover quickly after an incident while also saving money since you won’t have to pay for costly business interruption services.
What is Cybersecurity Insurance?
Cybersecurity insurance, also known as cyber liability insurance, protects businesses against financial losses caused by cyber incidents, including data breaches and theft, phishing and malware attacks, system hacking, ransomware extortion payments, and denial of service attacks. As with other kinds of insurance, you transfer some of your risk to an insurance company, so you don’t have to pay out of pocket when a breach occurs.
Cyber insurers provide multiple types of coverage, including first-party, third-party, and cyber extortion. Some cyber insurance companies offer supplemental add-ons such as crime policies, which cover workplace theft, and device cover, which protects cell phones. Policies also differ in terms of who they’re written for—some are designed for small and medium businesses (SMBs), others for mid-sized businesses, and others for large enterprises.
Is It Worth Getting Cyber Insurance?
The cost of a cybersecurity incident is expensive. According to a survey by IBM and Ponemon Institute, the average cost of a data breach is $4.24 million per incident. Those costs include fees, remediation, continuity costs, and lost business — and they’re so steep, they could spell the end of your business.
Every state requires that you quickly notify parties whose personal information was affected. If you don’t, you could face steep fines and penalties. In most states, you must also investigate and correct the security flaw that led to the breach, and the costs of fixing weak cybersecurity can be huge and often the reason why many small businesses have flimsy security in the first place.
But the costs don’t stop there. Expenses can continue to add up months or even years down the road. For example, your business will need to cover credit monitoring services for all affected parties for at least two years, and less obvious expenses from cyberattacks such as damage to your reputation, lost future opportunities, and lower valuation is harder to quantify but will impact your company’s bottom line. Cybersecurity insurance means your organization doesn’t have to bear those costs alone.
What Does Cyber Insurance Cover?
A typical cyber insurance policy covers the basics of recovering from a cyberattack, including:
- Legal expenses
- IT forensics
- Negotiation and payment of a ransomware demand
- Data restoration
- Breach notification to consumers
- Setting up a call center
- Public relations expertise
- Credit monitoring and identity restoration
Generally, a cybersecurity insurance policy does not cover:
- Costs of improving internal technology systems, such as security upgrades
- Loss of value due to intellectual property theft
- Potential future profit losses
How Much Does Cyber Liability Insurance Cost?
Cyber insurance costs depend on several factors, including your business’s annual revenue, your industry, the amount and sensitivity of the data held, the level of cyber risks you are exposed to, and the strength of your cybersecurity measures. Because of the increasing frequency, severity, and cost of cybersecurity incidents, cyber insurance premiums are on the rise – and an increase in cyberattacks will naturally result in an increase in cyber insurance claims, which increases the risk for providers, which then increases premiums.
But with the proper technology and practices to increase data recoverability, employee awareness, and customer protection, companies can reduce their cyber liability and, therefore, their insurance premiums. Additionally, many cyber insurance providers have conditions for their coverage, limiting or excluding benefits in certain cases where company negligence results in an incident or breach.
Organizations with a rigorous and layered security environment are far less likely to fall victim to failing policy conditions and more likely to have lower premiums and receive funds when an incident does occur.
Who Needs Cyber Liability Coverage?
There’s a misconception that only large businesses or industries such as finance, legal, and healthcare are more at risk, but everyone is at risk. In fact, SMBs often suffer greater repercussions from cyberattacks since they often cannot cover the subsequent damage expenses. This is especially disheartening when you realize that SMBs are targeted specifically because they can’t afford the protection of larger entities.
If your business uses, sends, or stores electronic data via computer systems and networks (even those used for email), you may benefit from cyber insurance. That data, whether it belongs to the business or is sensitive customer information, is vulnerable to cyber-attacks and data breaches. If a breach were to occur, you’d want it covered by an outside party rather than your budget. Businesses that rely heavily on their IT systems for operations should also purchase cybersecurity insurance, since any downtime could cost them money, even without losing any customer data.
Cyber Insurance Application
While cyber insurance is not a comprehensive solution for IT risk management and business protection, it is increasingly becoming a necessary component of every business’s incident response plan. The cyber insurance application process is typically more rigorous than other types of policies, as cyber risk is a constantly evolving coverage area facing new and different threats every day.
When it comes to cyber insurance, insurers want to understand and evaluate your cybersecurity infrastructure and determine your level of risk. How well can the people, processes, and technology you have set up for your company’s cybersecurity protect and respond to the ever-increasing number of cyberthreats?
Obtaining accurate information from the relevant people in the organization is critical to a successful application. Being honest about the risks and vulnerabilities your company may face from cyber threats is important to getting the best insurance coverage and not ending up with a rescinded policy or denial of coverage. The application process will help your company identify exposures that can then be addressed immediately.
OnPar Technologies Can Help with Your Insurance Application
At OnPar Technologies, we understand that securing a cyber insurance policy is now more time-consuming, complex, and expensive. We have tons of experience with the cyber insurance application process and can help your organization complete the application process properly and get the best possible policy. Our team will help you understand what insurers are looking for and determine if your security and IT infrastructure meet their requirements. If not, we will develop a plan to address any gaps. Contact us today to schedule a consultation!