In today’s always-connected world, the threat of cyber attacks is more prevalent than ever, and instances are on the rise. It is the responsibility of organizations to protect their data, but what happens when a data breach or ransomware attack occurs?
This is the question cyber insurance brokers find themselves asking their clients. Like any type of insurance, cyber liability insurance is meant to cover the cost of potential losses after a disaster, but the availability and requirements for obtaining cyber insurance are changing, and the cost of cyber insurance is going up based on the rising frequency of ransomware attacks.
Cyber Insurance: Changing Times
In the past, traditional policies would include coverage for a wide range of cyber attacks, but this has changed in light of rising cyber crime. In many cases, cyber insurance is now frequently required as a standalone policy alongside more conventional lines to adequately protect against threats.
As ransomware attacks have increased in frequency over the last few years, so has the number of companies seeking ransomware insurance. Given that the majority of companies pay the ransom, carriers increasingly find themselves re-assessing the level of risk they are willing to bear. Rising loss ratios as a result of more frequent and expensive claims lead to increased premiums.
When it comes to assessing eligibility for cyber coverage, there are many factors that could get in the way of approval. For example, weak authentication systems create vulnerabilities that appeal to bad actors. In cases where these risks exist, brokers should encourage their clients to implement protective measures within their digital systems.
In the above example, one way to improve the odds of eligibility is to implement multi-factor authentication (MFA). MFA is an authentication method which requires users to submit two or more forms of verification in order to gain access to an application or online account. This lessens the overall risk profile of a company, and it also shows providers that the organization is active in the maintenance of its digital assets. While this might seem like an extra step, it could be necessary in order to qualify for cyber liability coverage.
Employees and Security
In order to increase the chances of application approval, cyber liability brokers can ask their clients to provide evidence that they are protecting their assets. Oftentimes, employees within an organization neglect to install updates or regularly reboot their machines. When this happens, bad actors have a greater chance of accessing login credentials, as well as personal information.
Remote work has posed further security challenges for companies and, while some businesses make use of a VPN to secure their workers’ connections, web applications may still be vulnerable. Oftentimes, these systems are targeted by phishing attacks, which take advantage of users when they least expect it. When users have their guard down, it becomes much easier for bad actors to spread malicious files or collect sensitive credentials. Brokers should insist that their clients’ implement practices that reduce the likelihood of a major cyber attack.
One way to improve the odds of having a cyber insurance application approved is by performing regular security audits. Ongoing screening of an organization’s software patches, permissions, and firewall integrity increases the likelihood of catching potential threats before they become a problem. However, this will not be enough in the face of a sophisticated attack. Cyber liability brokers can persuade their clients to get involved by explaining the monetary cost of recovering data. Once a data breach happens, it is much more difficult for a company to rebuild their reputation.
As with all insurance, no company wants to react when it’s too late. As a cyber liability broker, guiding your clients through the various requirements helps make it easier to obtain cyber insurance, and Limit is here to provide support every step of the way.
Sell More Cyber with Limit
Limit is a digitally-native wholesale insurance broker working on behalf of retailers in multiple lines of insurance and across the United States. Our platform allows clients to:
- Obtain instant quotes from top cyber insurers
- Find up to $3M in Insurance coverage automatically
- Receive a plan with customizable and comprehensive coverage
- 24/7 support
Limit is building a lean, tech-enabled business that can efficiently deliver insurance policies which are tailored to the needs of individual clients. We have taken some of the first steps to revolutionizing the industry and welcome you to learn more on our website: https://www.limit.com/
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