Hiscox, one of London’s leading cyber insurance providers, released their 2022 Cyber Readiness Report with key details regarding the state of premiums in the cyber insurance industry. In their report, Hiscox found that by the end of 2021, 98% of businesses were paying higher premiums for cyber insurance.
Why are Cyber Insurance Premiums Rising?
For businesses that find themselves in the clutches of ransomware attacks, the price can be devastating. NetDiligence estimates that small to medium businesses are required to pay out around $145,000, on average. As incidents like these occur, the cost to business operations for SMEs can exceed $508,000. Since financial costs associated with ransomware attacks are expected to increase in coming years, cyber insurance premiums are likely to rise as a result.
Lower Your Premium: a Cyber Insurance Coverage Checklist
One of the best policies to lower premiums is to prevent attacks in the first place. The industry anticipates that businesses must take charge and invest in measures that make their systems less susceptible to cyber security attacks.
Here are 3 things you can do to lower your cyber insurance premium.
1. Implement MFA
Multi-factor authentication (MFA) is an authentication method that requires users to provide two or more verification factors to login. This can be as simple as requiring an additional layer of protection, such as a phone number, during account creation. A study from Google revealed that adding a recovery phone number can block up to 100% of automated bots, 99% of bulk phishing attacks, and 66% of targeted attacks.
2. Manage Cyber Risk
Giving thought to risk management systems is another great way to reduce cyber insurance premiums.
A good best practice is to assess your own weak spots. One way to do this is by conducting internal vulnerability tests. In doing so, vulnerabilities will be uncovered before they become serious. Insurance providers recognize when you take necessary action to reduce cyber threats, and being proactive in managing cyber risk can help lower premiums.
3. Continuous Data Protection
Whether you sell physical products or software, data is pertinent to your business. Any sort of breach involving your data could be ruinous to your operations.
Data breaches are often caused not by a fault in technology, but from human oversight. This is what occurred when Equifax was hacked a few years back. The breach occurred when Equifax security members neglected to install a software upgrade that would have restricted access to its users’ identities. As a result, the names, birthdates and social security numbers of 147 million people were exploited. Total cost: $1.7 billion.
You should also ensure that files within your company are encrypted. Every time a file is sent between parties, it creates an opportunity for bad actors to intercept key data. Keep your files safe by double-checking whenever files are being sent out of network, and be sure to perform regular backups of your data as your company grows.
Today’s top companies are turning to cyber insurance policies as a safeguard in the event of a data breach. Hiscox estimates that 64% of businesses now carry cyber insurance. This is not a localized development. Internationally, cyber attacks are considered the number one threat to business.
While expensive policies generally soften demand, surprisingly the appetite for cyber insurance policies remains quite high. This suggests companies around the world are increasingly appreciating the nature of cyber risk, and are willing to pay more to protect themselves.
The Limit Perspective
Limit Brokers 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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