With increased risk of attacks, cyber insurance a growing need

With increased risk of attacks, cyber insurance a growing need

Cyber ​​insurance has become a critical component of any organization’s risk mitigation strategy.
(Depositphotos image/gyn9037)

Cyber ​​insurance is a $7 billion industry that is projected to grow to $30 billion by 2025.

An industry growing that fast needs time to mature, warns Walter Hirsekorn, regional vice president at ISG Technology. “There are a number of policy issuers out there for the financial grab,” he said.

Companies need to evaluate cyber policies carefully before they buy, even when dealing with a reputable insurer, because insurance companies are not cyber experts, Hirsekorn said.

Large corporations have purchased cyber insurance for decades, but many mid-level and smaller businesses questioned the need until the COVID-19-inspired rise in remote work “opened the path for bad actors and gave them the keys to the castle,” he said . “It exposed globally that companies didn’t take cybersecurity seriously.”

Security breaches skyrocketed with claims outpacing premiums in 2021, Hirsekorn said. The response was premium increases from 80% to 120% in the first quarter of 2022.

Breaches in the US jumped 47% from June to July this year, and premiums are expected to continue growing with them, he said.

Cyber ​​insurance has become a critical component of any organization’s risk mitigation strategy. “Like identity theft, you think it never will happen to you until it does,” Hirsekorn said. “If you have anything connected to the internet, you need it.”

Along with the increase in premiums came enhanced security requirements – things like multifactor verification; end point detection and response; privileged access management; and backups that are secured, encrypted, offsite and tested.

Unless they are in place, insurers won’t cover your company, Hirsekorn said. The most unearthed you have determined where you fall on the premium chart.

He urges business owners to work with a company like ISG to put all the pieces in place before even applying for the insurance. With 100,000 too-few security professionals available to hire, the odds are you will have to rely on a third party, he said.

Cyber ​​insurance doesn’t protect you from a breach any more than uninsured motorist insurance prevents collisions because cybercriminals are developing ways to get around the safeguards every day, Hirsekorn said. “They’re not hackers. Cyber ​​criminals run it like a business. They have financial revenue goals.”

IT partners can help educate businesses about the importance of having a robust incident response plan in place before an attack does occur. This plan should include information about how to contact the appropriate people, what data needs to be backed up, and what steps need to be taken to minimize the damage caused by an attack.

In the event of a ransomware attack, cyber insurance can help businesses recover lost data and get back up and running as quickly as possible. Cyber ​​insurance also can help businesses cover the costs of hiring a professional to clean up any malicious software that might have been installed on their systems.

Hirsekorn said most companies are underinsured in cybersecurity when you consider it could cost $500,000 or $1 million in cash just to get back up and running.

Generally, the premium is between 3% and 4% of the insurance, so $1 million in coverage probably would cost $30,000 to $40,000.

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