With the surge in cyber-attacks, cyber insurance is becoming a necessity for many businesses. However, costs are rising and claims are being declined.
While the pandemic has significantly altered workplace relationships and ushered in a tremendous digital transformation, it has also resulted in an alarming increase in cyber-crime. The Colonial Pipeline ransomware attack, for example, was one of the most devastating cyber-attacks on digital infrastructure the world has ever seen in 2021. Given the rise of similar data breaches and ransomware attacks that have wreaked havoc on businesses around the world, cybersecurity risk management must take precedence in 2022 and be one of the top priorities for enterprises to maintain business continuity in the case of a cyber-incidence.
The Current State of Cyber Insurance
The cyber insurance industry is hardening at a fast pace across the board, which appears to be fueled primarily by the rise in ransomware attacks across all industries and the resulting losses. The widely reported hacking of managed service providers (MSSPs) and critical infrastructure businesses have accelerated a market that was already hardening.
Adapting to the Changing Environment
So, what can companies do to safeguard themselves?
First and foremost, businesses should consider teaming with a cyber-risk management and cyber-insurance expert. They can assist them in collaborating with their cyber insurance broker and planning ahead of time to address all of the areas that require attention long before their renewal is due, such as implementing all of the proposed and necessary controls and having all of the necessary documentation and evidence on hand.
Also Read: Navigating Today’s Evolving Cyber Insurance Landscape
Here are a few strategies companies can adopt to help navigate the hardening market:
- Assess the Insurance Program – Does the policy cover the company’s most critical risks? They should go over their insurance coverage with their agent to ensure they aren’t missing any exclusions that could expose the company to unnecessary risk.
- Budget for Inevitable Increases – Businesses must be prepared to deal with increasing premiums, which may be unavoidable in some situations. When budgeting, it’s critical to factor in insurance premiums with other regular expenditures. Businesses should ask their insurance agent what they see with similar clients insured by similar carriers to get an idea of how much of an increase to budget for.
- Understand the Loss History – In a hard market, loss trends will be scrutinised by underwriters. Organizations should be able to explain the circumstances that led to a specific loss as well as the efforts they have taken to prevent future losses.
- Boost Risk Management Measures – A well-thought-out risk management strategy can help in making the company more appealing to insurers. It will help mitigate risk, protect the company and keep the employees safe.
- Team Up with the Right Insurance Broker – Having an insurance agent with strong insurance company connections, as well as expertise and knowledge in the field, is critical in a hard insurance market.
- Communicate with Insurance Agent Frequently – Starting the renewal process early gives the agent more time to select the optimal coverage for the company. In the face of rising expenses, this also gives time to test new programmes models and alternatives to conventional coverage.
Insurance buyers should be prepared to make difficult decisions about their insurance coverage during a hard market. Fortunately, they are not without options. They will be better equipped to meet the challenges of a hard market if they control losses, address risk, and manage exposures ahead of time.
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