Just as businesses are learning about cyber liability insurance, the insurance industry is tightening its approach to covering cybersecurity breaches. Ransomware attacks have become increasingly expensive to resolve, while the insurance protection against them is shrinking. Here are important points to know about the changing environment surrounding cyber liability coverage.
Due to rising cyberattacks and the expensive damage they cause, insurers are making it more challenging for businesses to secure cyber liability insurance. The coverage still protects companies that suffer data breaches and pays for system restoration, as well as legal costs. But insurers are also paying closer attention to the costs of payouts and are looking for ways to cut these costs.
One of the key changes to be aware of about cyber liability insurance is that insurers are steadily raising premiums. Part of this increase is a response to the increased attacks during the pandemic, as many companies moved toward remote work. But opening up multiple access points on a network becomes less secure and creates vulnerabilities for hackers to exploit.
During the pandemic, cyber liability premiums had double-digit increases due to the uptick in breaches. The state of rising cyber insurance costs has particularly hurt small businesses that already must deal with rising costs of supplies.
Another way insurers are reducing cyber liability payouts is by dropping coverage for ransomware payments. European insurer AXA has completely discontinued paying for ransomware demands, and others are expected to follow. In other words, insurance companies are looking for ways to cut the risks of payouts for cybercrime.
Some cyberattacks originate from nation-states, but insurers are looking to drop or reduce this coverage as well. Lloyd's of London has led the way in moving away from this high-risk coverage. It's a reminder that the infamous "WannaCry" ransomware attack in 2017 was associated with state-sponsored hackers. The attack affected over 200,000 computers around the world.
Other insurance agencies are beginning to require businesses to implement cybersecurity measures in order to qualify for cyber liability coverage. Businesses are expected to use strategies such as network monitoring, multi-factor authentication, and advanced threat protection.
Due to the changing state of cyber liability insurance, there are new opportunities for cybersecurity service businesses to consider. A cybersecurity firm can use the news about rising cyber insurance costs to promote the need for stronger cybersecurity. In other words, the best protection against cybercriminals is cybersecurity itself to reduce the chances of an attack.
The cost of a cybersecurity breach can be thousands or even hundreds of thousands of dollars for a business. Without the right insurance in place, these losses can be too devastating for small businesses to overcome. So a cybersecurity firm can promote its offerings as a more effective way to mitigate attacks than relying on an insurance policy.
It's still smart to get cyber liability insurance on top of a strong cybersecurity strategy. But make sure you read the policy so you know exactly what it covers. Don't assume it covers all damage related to a cyberattack.
Businesses increasingly need to consider cyber liability insurance and cybersecurity as essential to their survival. Contact us at Fuller Insurance Agency today to secure protective coverage for your business. Our agents will also answer any questions you have regarding the various policy coverages.