Cyber Insurance: Challenges Which Has Resulted in a Price Increase
The world appears to have entered a new era of cyberattacks in 2020. Cyberattacks of all types are becoming a major threat for all businesses. Therefore many organizations are opting for cyber insurance to shield themselves from some of the consequences of a breach.
Cyber insurance, often known as cyber liability insurance coverage (CLIC), safeguards businesses from the consequences of cyberattacks and hacking threats. CLIC can mitigate the business disruption during a cyber-incident and its aftermath while simultaneously covering the monetary cost of dealing with and recovering from the attack.
How Can Cyber-insurance Reinforced
Cyber insurance is a relatively new and rapidly growing sector. Businesses who purchase cybersecurity insurance earlier are nowadays considered to be early adopters. Cyber insurance policies have been purchased by organizations of all sizes to enhance protection.
When it comes to enforcing a cyber-insurance policy, there are a few integral elements to consider. Sound cyber hygiene is key here, says Bailey. “This includes a robust backup strategy, multi-factor authentication at all critical access points, and strong patch management. We also continue to see the power of scanning technologies and proactively shoring up vulnerabilities.”
The Impact of Ransomware and Litigation in Cyber Insurance
Enterprises have continued to be plagued by increasing cyber threats and dangers, putting their resiliency to the test. As a result, cyber insurance companies are becoming more knowledgeable and responsive to specific cybersecurity threats.
Ransomware is at the forefront of the trends affecting demand for and cost of coverage, cyber insurance policy terms and conditions, regulations, and restrictions. Actors are extorting corporations for potentially massive amounts of money using craftier and more sophisticated tactics.
According to Bailey, the rise in ransomware has prompted more businesses to consider purchasing cyber insurance after witnessing the cost of ransomware wreaking havoc on other enterprises. “Aside from the direct costs of a ransom, recovering from these attacks is costly. In 2021, breach response costs increased from 29% to 52% of overall claim costs.”
As demand has risen, supply has struggled to catch up, Bailey adds. “Insurers are raising rates and standards for risks they are willing to cover. In terms of the coverage itself, some insurers have pulled back on how much they’ll cover for a ransomware attack or reduced the overall limit they are offering for businesses of a certain size.”
However, data from global insurer Beazley recently revealed that, despite a downward trajectory in claims, prices for cyber insurance are continuing to rise, with renewal premium rates up 23 percent year-on-year in the third quarter of 2021.
“What’s more, the coronavirus pandemic increased the vulnerability of many organizations to cyber risk, as thousands of systems moved to cloud-based platforms to enable a remote workforce,” says Proofpoint’s resident CISO Andrew Rose. “During this time, cyber insurance companies urged businesses to re-evaluate their insurance policies, as the evolution of their tool sets and working practices, and the threats that apply to them, may not be represented in their existing cover, leaving unexpected gaps and shortfalls which could be catastrophic.”