As cyber criminals launch more sophisticated attacks, the costs of a cyber-attack are going up. Ransom payments are higher than ever, more states are enacting data protection laws, and related regulatory fines are soaring. In 2024, the global average cost of a data breach was $4.88 million, a 10% increase from the year before. It won’t be long before a data breach represents a $5 million expense.
As the stakes rise, businesses are naturally turning to cyber insurance to help cover the expenses. At the same time, cyber insurers are getting stricter about their requirements. Without evidence that you have up-to-date cybersecurity policies, your company could be deemed uninsurable or pay sky-high premiums.
Fortunately, a great way to get lower cyber liability insurance premiums and improve coverage is to work with an expert managed security services provider (MSSP) to set up effective cybersecurity solutions.
The Shifting Cyber Insurance Landscape
According to the Traveler’s Risk Index, 54% of business leaders think cyberattacks are inevitable. Since attacked companies can be liable for legal expenses, data breach recovery, regulatory fines, reputation management, ransoms, equipment repairs, and business interruption costs, it is easy to see why 62% of organizations now carry cyber insurance, while another 38% are actively considering it.
But, as business interest rises, so do the rates. In the first quarter of 2022, insurance prices for cyber-attack coverage rose by 110%, and price turbulence continues to be a common issue as the industry establishes itself.
In addition, recent, high-profile attacks have changed underwriting approaches. Cyber insurers now often require their clients to demonstrate proficiency in meeting cyber hygiene best practices, and insurance applicants are expected to have robust incident management strategies.
Core Cybersecurity Requirements for Cyber Insurance Coverage
Most cyber insurance carriers now demand fundamental security controls, including:
- Multi-factor authentication (MFA)
Using an authenticator app, security key, or one-time password is non-negotiable for insurance coverage. Without it, a cyber insurer won’t even talk to you.
- Endpoint protection
User devices that access your data must be monitored for up-to-date security measures, including antivirus / antimalware software, firewall protection, and timely patching.
- Backup and recovery procedures
Your business should perform frequent, secure, “snapshot” backups that facilitate a quick data restoration process. You should also have a clear business continuity plan in place.
- Employee training and awareness programs
Training your team to spot phishing or Business Email Compromise (BEC) attacks can save you and your insurer millions of dollars. Experts recommend using cybersecurity solutions that continuously train and test your staff to build their phishing awareness and responsiveness skills.
A managed security services provider like SWK Technologies can help you set up all of these measures and identify other potential areas for improvement, enabling you to apply for cyber liability insurance coverage quickly.
Security Measures Affecting Premium Rates
Cyber insurers often adjust their premiums based on applicants’ cybersecurity maturity. You can position your company as a lower-risk applicant by focusing on 5 key aspects of cybersecurity:
- Endpoint Detection and Response (EDR)
Businesses with robust EDR solutions typically demonstrate a proactive stance on cybersecurity. Being proactive reduces the likelihood of breaches and limits the damage if an incident occurs. With EDR solutions in place, insurers may determine that your company is at a lower risk for frequent or severe claims.
- Security Operations Centers (SOCs)
Security Operations Centers (SOCs) continuously monitor networks, systems, and endpoints, which enables rapid detection of suspicious activity. Quick detection helps contain cyber threats before they escalate into significant incidents, and insurers view this as reducing the organization’s overall risk exposure. This can lead to more favorable underwriting decisions.
- Zero-Trust Architecture
Zero-trust frameworks assume that no user or device should be automatically trusted, even if they are already within the internal network. This rigorous security approach minimizes lateral movement — in essence, it contains potential damage and reduces the risk of widespread breaches, which are often the most severe and costly. Since zero-trust is so effective, insurers use it as a key metric when determining risk levels.
- Incident Response Planning
An incident response (IR) plan focuses on detecting, responding to, and mitigating the impact of a cybersecurity incident. Insurers view a well-developed IR plan as a good indicator of a company’s readiness to manage cyber threats. Again, since it shows proactive, mature planning, it can lower cyber insurance premiums.
- Adherence to Security Frameworks
Security experts have developed and refined various best practices to keep current threats at bay. These are known as “security frameworks.” Some of the most well-recognized ones in the U.S. are PCI-DSS and SOC 2 (technically an attestation), along with industry-specific compliance regulations like HIPAA. A company can demonstrate adherence to these frameworks and regulations by successfully passing an audit. Insurers are likely to reward this with lower premiums and better policy conditions.
Managed Security Services Can Help You Improve Your Insurance Rates & Coverage
As you can see, a strong cybersecurity stance can help your company receive approval for cyber insurance, lower your rates, and improve your policy terms.
Because of this, many companies are taking a strategic approach to their security investments by calculating the Return on Investment (ROI) with insurance costs as part of their overall considerations.
Do you have a cybersecurity plan that meets your needs — and your insurer’s? SWK Technologies can work with you to develop the right security plan for your company.