Cybersecurity insurance, initially meant for big companies in the 1990s, now helps small and medium-sized businesses cover costs related to data breaches. This includes fixing malware issues or hacked accounts. Modern cyber insurance policies typically help pay for:

• Restoring stolen or lost data
• Fixing damaged computer systems
• Informing customers about data breaches
• Offering identity monitoring services
• Conducting IT forensics
• Covering legal fees
• Paying ransomware demands

But data breaches are becoming more common and more expensive. In fact, 2021 saw a record number of incidents and 2023 nearly doubled it. All of this means that the importance of cybersecurity insurance continues to grow.

No business, big or small, is immune to cyber threats. In fact, about 60% of small businesses shut down within six months after a cyber incident because they can’t recover from the damage.

As cyber risks and the costs of breaches grow, cyber insurance policies are constantly changing. Staying informed about the latest trends in cyber liability insurance is crucial for businesses to remain protected.

Here are some key trends you should be aware of.

Demand is on the Rise

The average cost of a data breach globally has reached $4.35 million, and a staggering $9.44 million in the U.S. As these costs soar, more companies recognize the critical importance of cyber insurance—comparing its necessity to that of traditional business liability insurance. Without such protection, many companies face the risk of going under after just one breach.

With the growing demand, you can expect increased availability and a broader range of policy options in cybersecurity insurance, which is beneficial for those seeking coverage.

Premiums are Increasing

As cyberattacks have become more frequent, insurance companies have had to pay out more claims. To cover these costs, they’ve raised the prices of cybersecurity insurance premiums significantly—by 74% in 2021 alone.

The rising costs from lawsuits, ransomware payments, and other security issues have fueled this increase. As a result, while cybersecurity insurance is becoming more essential, it’s also getting more expensive.

Certain Coverages are Being Dropped

Insurance companies are starting to exclude certain coverages. For instance, many no longer cover attacks from nation-states, which are attacks linked to governments. These governments often have connections to notorious hacking groups, making these types of cyberattacks a serious risk.

In 2021, 21% of attacks from nation-states targeted individual consumers, while the majority, 79%, targeted businesses. Be cautious if an insurance policy doesn’t cover these attacks.

Additionally, coverage for ransomware is also being removed from some policies. Ransomware attacks have been increasing for several years. Insurers are withdrawing ransomware coverage because they’re weary of clients who lack secure systems and rely on insurance to cover ransom payments. This change forces businesses to improve their backup and recovery plans to protect themselves.

It’s Harder to Qualify

Getting cybersecurity insurance is becoming more difficult. Insurers are tightening qualifications and are cautious about covering companies that don’t maintain strong cybersecurity measures.

Insurance companies typically assess several aspects of your cybersecurity:

• Network security
• Implementation of multi-factor authentication
• Policies on bring your own device (BYOD) and device security
• Advanced threat protection capabilities
• Automated security processes
• Backup and recovery plans
• Control of administrative access
• Anti-phishing measures
• Employee security training programs

Applicants often need to complete a detailed questionnaire about their cybersecurity practices. It’s beneficial to work with your IT provider when filling this out. They can help identify areas for improvement that could not only qualify you for coverage but potentially lower your premiums.

Preparing in this way can save you money and strengthen your cybersecurity defenses, making it a worthwhile effort before applying for insurance.

Need Help Making Sense of Cybersecurity Policies?

Understanding cybersecurity insurance can be tricky. A simple mistake on your application might cost you hundreds in premiums. If you’re thinking about getting cybersecurity insurance, let us help.

Call us to set up a consultation where we can go over the policy details and guide you through the process.

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