In the last couple of years, cyberattacks have increased significantly. Attackers just want to make easy money and leave the prey hanging.
Interestingly, the market size for cyber insurance will reach $22 billion in 2025. This sounds like good news but only for cyber insurance companies. Because people who’ll be affected by it will probably lose important data as well.
But what’s the easiest solution for it, then? A Cyber Insurance and Cybersecurity measures.
With that said, let’s discuss more about cyber insurance and how it has become difficult to obtain in 2024.
Intro to Cyber Insurance
Cyber insurance helps pay for problems caused by online attacks. These attacks could be data breaches or when someone steals private information. It is divided into two:
- First-party coverage for direct expenses.
- Third-party coverage for legal claims.
For instance, if there’s a data breach, first-party coverage handles recovery expenses. Meanwhile, third-party coverage manages any legal actions taken by customers.
Who Needs Cyber Insurance?
Cyber insurance has become an essential part of business now. And why’s that? Due to the surge in cyber threats. Also, because of the imperative for DMARC compliance.
So, to simply the things for you, here’s a breakdown of who could benefit the most:
Businesses of All Sizes
Cyber insurance is crucial for businesses. It helps protect those handling electronic data, like customer contacts and sales records. This includes e-commerce companies. Downtime from cyber incidents can cause significant sales and customer losses.
Healthcare Providers
Secondly, healthcare companies also face frequent cyberattacks because they store valuable patient data. However, the average cost of a healthcare breach is very high. Still, cyber insurance helps reduce these financial and legal risks.
Financial Organizations
Banks and credit unions are full of sensitive customer info. Cybercriminals see them as a big, shiny target. But there’s a hero in this story: cyber insurance. It steps in to shield these companies from the financial storms caused by cyberattacks, helping them get back on their feet and keep their customers’ trust strong.
Government Agencies
Government offices are another place where a lot of private information is stored. This makes them targets for cyberattacks. Cyber insurance is key to protecting them against these threats. It helps keep public services running without any breaks.
Educational Institutions
Schools and universities store a lot of personal and academic information. This shows how important it is for these institutes to have cyber insurance. It helps protect against data leaks and cyberattacks.
Companies with High Revenue
Big businesses that make a lot of money attract hackers looking for profit. Cyber insurance offers these companies protection against money loss from cyberattacks. It decreases their losses and keeps them trustworthy in the eyes of their users.
Barriers to Effective Cyber Insurance Coverage
1. Impractical Cyber Insurance Policies
Businesses often struggle to understand their cyber insurance coverage. This confusion can cause disagreements and delays during cyber attacks. Cyber threats are constantly changing, making it difficult to keep policies current. This situation can lead to either insufficient protection or overly expensive policies.
2. Complex Claim Process
Filing insurance claims can be tiring, especially for small business who have limited resources. Insurers demand extensive documentation and proof of loss, adding to the time and burden for businesses.
3. Limited Risk Modeling
Insurers have a hard time with cyber risks. They usually look at digital asset losses. Cyber attacks also harm reputation and property. This includes intellectual property. It’s time for a new way to assess risk.
4. Rising Premium Costs
Annual cyber insurance premiums are rising, affecting SMEs and causing underinsurance issues. S&P Global Ratings predicts a 25-30% yearly increase until 2025.
5. Lack of Cyber Awareness
Some businesses don’t see how costly cyber-attacks can be. They might not get cyber insurance or email blacklist checks. Even though numbers show the risk, small and medium enterprises (SMEs) think they’re safe from attacks. Also, people without much cybersecurity knowledge often choose what to buy. This can leave big holes in their protection.
Coverage of Cyber Insurance
Covered in Insurance
Cyber insurance includes:
- Customer notification costs following a security breach.
- Legal fees due to privacy violations.
- Expenses for hiring computer forensics experts.
- Identity restoration for affected customers.
- Data recovery and restoration.
- Repairing or replacing damaged computer systems.
Not Covered in Insurance
Cyber insurance doesn’t cover everything. It often doesn’t cover issues that could be prevented, like:
- DNS spoofing.
- Preexisting or prior breaches not disclosed at policy purchase.
- Cyber events initiated by employees or insiders.
- Infrastructure failures unrelated to cyber attacks.
- Failure to address known vulnerabilities.
- Costs to improve technology systems.
- Loss of intellectual property value.
Basic policies usually cover direct losses, but now, some insurers also cover losses to others caused by the policyholder. However, policies often don’t cover losses from mistakes or carelessness by people.
How to Decrease Cyber Insurance Charges?
To lower your cyber insurance charges, make your company less of a risk. Improve your defenses against data breaches by:
- Use Multi-Factor Authentication: This stops hackers from asking for multiple proofs of identity.
- Try Zero-Trust Security: Don’t trust any user or device without checking them first to increase safety.
- Set Up Data Loss Prevention: This helps stop data from being stolen or lost by watching and controlling data movement.
- Teach Your Team: Ensure employees know about cyber threats and rules to prevent mistakes.
- Make a Plan for Incidents: To reduce harm, have a clear plan for responding to a cyber attack.
You should know that cyber insurance isn’t a guarantee against breaches. It is only a means of recovery after the attack. So, if you want to prevent these attacks, maintain a robust security posture. Investing in cybersecurity, with measures like DMARC setup, helps prevent breaches and lowers insurance premiums in the long run.
Summing Up
Cyber insurance is now essential for cybersecurity. It works best with services like PowerDMARC for strong protection. Making policies better is important to get more businesses to use them. Insurers need to work with cybersecurity experts to offer customized services.
Working with cybersecurity pros helps insurers manage risks better. This teamwork is key to improving cyber insurance and its benefits for businesses.
