It’s no secret that ransomware is rampant, affecting all industries, both private and public sector. While many businesses already have cyber insurance, interest has spiked more broadly given the considerable chance of attack.
Cyber insurance is an insurance policy that provides financial protection against losses resulting from cyberattacks, data breaches, and other cyber-related incidents. It may cover costs related to lost income, legal fees, data recovery fees, and the cost of hiring a public relations firm to help with damage control to a company’s brand. Cyber insurance policies typically include coverage for both first-party (direct) losses (such as lost revenue or data recovery costs) and third-party losses (such as legal costs and settlement payments).
However, insurance companies have now realized that the prevalence of ransomware, and its focus on backup systems, has significantly increased their liability. For this reason, the ability to gain cyber insurance, or maintain it, has changed.
Read on for the five essential cyber insurance questions—and which key features these insurance companies may require in backup and recovery systems for applicants to qualify.
It’s important to note that these, and other qualifications, can vary by insurance company and by policy, so it’s essential to review the terms and conditions of all policies carefully. It’s also a good idea to work with a trusted insurance broker who has experience with cyber insurance to help find the right coverage for your business.
Internal security controls are essential for reducing the risk of a cyberattack and improving the chances of a successful recovery in the event of a breach. Here are some internal controls insurance companies may look for when evaluating a business’s eligibility for insurance:
Having these security controls in place—and regularly reviewing and updating them—can demonstrate to insurance companies that a business is making cybersecurity a priority and is trying to reduce the risk of a breach.
With the growing threat of cyberattacks and the increasing need for businesses to protect against them, insurance companies are becoming increasingly focused on security measures, including backup and recovery. In addition to strong internal security controls, they may require applicants to demonstrate that they have the following modern backup and recovery capabilities in place to qualify:
Having these backup and recovery capabilities in your solution can demonstrate to insurance companies that a business is taking proactive steps to protect against data loss and minimize downtime in the event of a cyberattack. This can help increase the chances of a successful recovery and may improve the ability to purchase cyber insurance and its terms and conditions.
1 Minimize Risk by Better Knowing and Managing Your Data, Michael Hoeck, Gartner, December 2022
Cyber insurance is one part of a comprehensive approach to protecting your business against cyber threats. Here are some additional steps to enhance your cybersecurity posture:
Whether cyber insurance is necessary for your business depends on several factors, including the size of your business, the types of data you collect and store, and the potential impact of a data breach or
If your business stores sensitive customer information, handles financial transactions, or relies on technology for daily operations, it’s particularly vulnerable to cyber threats. In such cases, cyber insurance can provide critical protection against financial losses, reputational damage, and legal liability in the event of a breach.
Large enterprises, and even small businesses, can benefit from cyber insurance, as the cost of a breach could be substantial and possibly devastating for a business, regardless of its size. By purchasing cyber insurance, you can transfer some financial risk associated with cyberattacks to the insurance company.
Cyberattack costs in 2023 are expected to reach $8 trillion USD worldwide according to Cybersecurity Ventures. A multilayered security approach is critical to combating ransomware, and cyberattacks more broadly. Cyber insurance, a modern data management and security platform, internal security measures, and personnel training may all play a role in helping to protect your organization’s data and recovering it after an attack.
By taking the steps outlined here, and having a comprehensive cybersecurity strategy in place, you can better protect your business against cyberattacks and ensure that you’re prepared in the event of a breach.
Cyber insurance can be a wise investment for businesses of any size seeking to protect against the financial consequences of a cyberattack or data breach.