No business is immune from cybercriminals and their malicious activity. It’s hard to keep up with all of the moving parts of a risk management solution. But one thing that should never be overlooked is cyber insurance for your business. And, unlike car insurance, it cannot be set on autopilot once you subscribe to it. Things change. Just look at 2020, the year of the pandemic, when the need for cyber insurance tended to grow each day.
It is the responsibility of a good cyber insurance agent or broker to know your business and your industry, the compliances your business requires, and ensure that your organization has the right policy in place.
What Does Cyber Insurance Cost?
The good news is that pricing depends heavily on your revenue. Whether you’re a small business making $250,000 per year or a larger business with $25 million in revenue, premiums tend to match your capacity to pay.
What industry you are in — manufacturing, retail, professional services — also has a lot to do with how much you will pay for cyber insurance. Carriers have different “risk appetites” — how much they’re willing to take on risks from certain industries — and there isn’t much you can do about whether there’s a low or high appetite for your business. The risk appetite is related to the type of data your business collects and stores and its sensitivity.
For harder numbers, a recent study showed that in 2019 the average cost of a cyber liability policy was $1,500 per year for $1 million in coverage, with a $10,000 deductible.
Why are Premiums on the Rise?
A few things are at play. For one, cyberattacks have dramatically increased.
In 2019 organizations lost more than 7.5 billion due to ransomware. The importance of cyber insurance is continually growing.
Second, businesses aren’t adopting a full cybersecurity solution, which causes rate hikes when companies buy insurance but aren’t holistic about their risk management and end up filing preventable claims. To learn more about our CyberComplete solution, which includes breach response, education, and other preventative measures, read more here
There are also other contributing factors to rising premiums. Trends in the remote workforce, for example, are leaving companies more vulnerable to cyber-attacks. The reliance on emerging technology impacts insurance premiums, specifically, remote desktop protocols, while providing greater connectivity also opens companies to cyber risks.
In a report earlier this year, Standard & Poor’s Corp. stated, “Cyber insurance premiums, which now total about $5 billion annually, will increase 20% to 30% per year on average in the near future.”
When Should I Revisit My Policy?
A gap in insurance coverage will leave a company vulnerable.
In the case of insurance, and specifically cyber insurance, not all policies are created equal.
Suppose you are a business owner with a cyber policy–your agent will know when your renewal is about 60 – 90 days out. Best practices include remarketing at any time, although most agents/brokers will remarket annually. You want the most competitive policy, and therefore side-by-side comparisons will help you understand apples-to-apples what you are getting in your coverage.
What Business Owners Should Know.
- It takes most companies about 200 days to identify a security breach and about 70 days to contain a breach.
- A cyberattack occurs every 39 seconds (University of Maryland).
- Cybercrime will reach a cost of $6 trillion by 2021. (Herjavec Group)
- $149,000 is the average cost of a data breach for a small business, according to AppRive, 2019
- The average cost of cyber attacks per organization in the U.S is $8.64 million (IBM)
- The most expensive part of a cyber attack is information loss at $5.9 million. (Accenture)
- According to Marsh, the number of U.S. clients to purchase standalone cyber insurance for the first time grew to 18% in 2019, up from 12% in 2018.
- Leading buyers of cyber insurance in 2019 were education, health care, hospitality and gaming, and communications media and telecommunications industries.
- You should review all of your insurance policies once a year.
- There are specialized cyber insurance policies and differences for markets – working with an insurance broker will ensure that there is no lapse in coverage and that you receive the right approach.
What Should be the Next Steps to Secure the Right Policy?
Remember that not all policies are created equal and specific endorsements can be negotiated with insurers to best suit your company’s needs. Second, minimizing cyber liability risk starts with educating your employees about suspicious emails and communications.
Last but not least, there are baseline products available to get you started.
Talk to your agent about the coverage that’s right for your business.
Note to Agents: The Dedicated Cyber Producers at FifthWall Solutions will help you respond to your clients quickly. We have access to 30+ markets, allowing you to quickly identify the right policies today and at renewal, mitigate hard-to-place risks, save you time and your client’s money.