You may think cybersecurity insurance coverage is too costly for your small business to afford. Prices certainly have risen in recent years. But there is a good reason for that: cybersecurity insurance is now more expensive because of the rise in attacks and, thus, claims. But that means it is more important to have coverage than it ever was. Here are five trends that are making that true.
Risk has increased
In 2020, amid the COVID-19 pandemic, a widespread and almost instantaneous shift to working from home increased cybersecurity risks. That meant many businesses did not have time to thoughtfully consider and implement protocols and best practices for protecting themselves in the new remote world. Common areas of weakness include failure to enable multifactor authentication, failure to ensure thorough backups are readily available, failure to patch systems regularly and failure to develop an incident response plan and properly train employees about best practices.
Cybercriminals are getting more creative
You are probably familiar with common cybersecurity buzzwords: malware attacks, phishing, denial of service. The point is there are many ways criminals can gain access to your systems, and as you improve your security, criminals improve their creativity. They may, for example, target a new employee by emailing him or her with a phishing attack under the guise of an onboarding training. This requires constant education and diligence.
Vendors are a weak point
It is likely that you have a number of agreements with different vendors. And if those agreements are more than a year or two old, they may not include adequate language to account for cybersecurity risks. In other words, you, not the vendor, may be liable for your vendor’s failures to protect your data. You can do everything necessary to ensure your business’s cybersecurity, but when a vendor has access to your information and doesn’t follow the same security protocols, you may still be at risk.
Cybersecurity insurance premiums are rising as claims do
Cybersecurity insurance claims are increasing. They rose by 89% in the fourth quarter of 2021, according to Risk Strategies State of the Market 2022 Report. And payouts are costly to insurers. According to NetDiligence’s Cyber Claims Study, between 2016 and 2020, the average cost to an insurer for a cybersecurity claim was $145,000 for small and medium-sized businesses and $10 million for large businesses. That is driving a significant climb in premiums.
More insurance options are becoming available
Fortunately for small businesses, as cybersecurity insurance becomes increasingly important, ways to get it are increasing. More and more insurers are letting you tailor coverage for emerging risks that are difficult to pinpoint, cyberattacks included.
The bottom line
A cyberattack can put you out of business for days or even weeks. It also creates significant liability and reputational harm. But being proactive about cybersecurity insurance can help protect you. And getting it may not be as costly as you think, thanks to the insurance industry’s adaptability.
We can help you review your current insurance coverage and determine if you need cybersecurity coverage. Call or email us today.