The ask of the ransoms, along with the average ransomware payment, has skyrocketed in recent years. It can push companies to the brink of bankruptcy or force them to shut down operations they can’t afford. As a result, many are turning to cyber insurance for help.
Cyber insurance is primarily designed for businesses that rely heavily on their IT systems to function 24/7. Today, practically every industry is affected, including healthcare, manufacturing, critical infrastructure, municipalities, and distribution. Some companies that obtain a full-coverage plan, however, begin to let their guard down and may simply pay a ransom since they know the insurance company will cover it later.
The original goal of cyber insurance was to cover a business’s extortion losses if a successful ransomware attack occurs, leaving the business with no other choice but to pay the ransom demand in order to maintain business continuity or limit future losses. However, rising lack of awareness and responsibility from a few insured organizations is tipping the balance of the cyber insurance market, causing insurers to hike premiums and change underwriting requirements to reduce their own risk of loss.
The average cyber insurance premium rate has climbed by 32% year on year, according to the Howden Group’s report “Cyber Insurance: A Hard Reset,” published in June 2021. In addition, insurers are increasingly requiring third-party IT providers to undertake a field evaluation of their cybersecurity measures to see whether they meet the standard. If the company does not satisfy the standards, the insurer’s hired vendor will notify the applicant businesses what they need to add, and the insurer will not sign the contract until everything is in place.
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Enterprises now face a dilemma: on the one hand, there is the risk of increasingly growing malicious attacks; while on the other hand, there are the costly premium packages with complex prerequisites and restrictions that may not cover all damages. Criminals will be the only ones who benefit if this vicious cycle continues.
Maintaining a robust cyber insurance market environment should be a shared duty between insurers and insured organizations. Businesses should take the first move to change this downward trajectory.
When it comes to cyber insurance, every business owner should know what to look for. They should always read the fine print to ensure that they are aware of the coverage, exclusions and deductibles. If the policy is properly structured and the company is well aware of its coverage, this safety net can be extremely beneficial.
The majority of ransomware attacks today do not end with the initial breach. For instance, instead of closing down SolarWinds’ IT systems, attackers inserted malicious code in the company’s Orion technology platform, which is used by over thirty thousand customers, including the US Department of Homeland Security, US Department of Energy, and other national agencies. Although the hackers did not demand a large ransom, the damage and possible vulnerabilities produced by this attack are immeasurable and cannot be covered.
Insurance against ransomware isn’t enough. Regulatory compliance, data breach liability and other cyber-risk issues should all be covered in a well-written policy. There are also companies that specialize in cyber insurance and are familiar with the risks that specific businesses face. Starting with their current business liability insurance provider and asking whether they have experts that deal with cyber insurance is the simplest approach for business owners to obtain an insurance plan that best matches their organization.
Developing a cybersecurity training program for employees and adopting effective cybersecurity technologies should always be a top priority because it helps to limit threats at their source. Regular IT checks and system updates should be conducted to ensure that all patches are installed, preventing attackers from exploiting backdoors.
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Businesses should be particularly vigilant in the ever-changing cyber-attack scenario. While purchasing cyber insurance is a good idea, companies should also learn to use other tools to defend themselves.
Owners should always select the insurance plan that best suits their company’s needs, read the fine print, keep up with cybersecurity updates, and create a healthy and beneficial ecosystem between insurers and insured businesses. Insurance firms should also strike a balance and make sure that plans are feasible for businesses of all sizes. To guard against the growing cyber threats, both business owners and insurance firms must work together.
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