Some Disturbing Changes Are Happening to Cybersecurity Insurance

Over the last few years, more and more small businesses have signed up for cyber insurance to protect themselves from the fallout of cyberattacks like ransomware, business email compromise, and phishing attacks. It’s easy to see why businesses turn to cyber insurance. Cyberattacks have gone up at least 400% since the start of the pandemic. 

However, before you renew your cyber insurance – or start Googling providers – you should know that the cyber insurance market is currently experiencing a considerable shift. 

The long and short of it is that insurance premiums are getting more expensive and harder to come by. But there’s a backstory to these changes that is well worth knowing if you’re thinking about getting coverage. In fact, after reading this piece, you might decide not to get it altogether! Let’s dive in. 

Cyber insurance premiums are skyrocketing: here’s why 

Cyber insurance used to be a no-brainer for many businesses. It helps to cover the costs of damages and claims associated with a data breach. However, over the last 18 months, premiums have skyrocketed, and research indicates that most premiums have jumped by between 50% to 100%. 

The reason for these increasing prices isn’t an anomaly. Chances are, premiums are going to continue rising and stay high. This is because the cyber insurance market is still in its infancy. In other areas of insurance, providers have years of historical data they can use to predict steady premiums. However, cyber-attack tactics are evolving by the year. The field is still relatively new. 

Up until now, insurers have basically been selling cyber insurance at a loss. The model isn’t sustainable for them. The National Association of Insurance Commissioners analysis of the U.S. cyber insurance market, for example, found that the volume of cyber insurance premiums written grew by almost 30% in 2020, while loss ratios for many carriers were over 100%. 

Part of the reason for these losses is the massive rise in ransomware attacks last year, which led to many insurance providers handing out loads of cash to their own detriment. 

In order to remain profitable, insurers are changing the game. Firstly, they’re making insurance more expensive so that they’re less likely to lose profits in the long run. As well as this, they’re also asking clients to improve their security defenses in order to obtain coverage. They won’t insure just any business anymore. You need to show that you’re being proactive about security. 

What the changes in cyber insurance means for your organization

If your company currently has cyber coverage, we advise you to review your policy in detail before renewing. Chances are, your insurance will be a lot more expensive, and you may need to make some security investments in order to qualify for renewal. 

If you’re a company that is considering cyber insurance, we advise you to think carefully about your options. Cyber insurance, after all, isn’t a form of protection against attacks. It’s an aid that helps with recovery. 

For example, if you’re a local business that’s debating cyber insurance, you’re probably better placed to spend your money on boosting your security defenses or even hiring a managed IT services provider than paying for cyber insurance.

In fact, we’d recommend starting with focusing on improving your security posture before even considering cybersecurity liability insurance. This is because, without adequate protection, your insurance premium will be expensive. Moreover, by putting the right security solutions in place, you can dramatically reduce the chances of falling victim to a cyber attack. 

We understand that many SMBs lack the internal resources and expertise to dedicate much time to cybersecurity. That’s why working with a managed IT services provider makes sense for SMBs. Managed IT support can save you from a breach that costs your company tens of thousands of dollars, and that could potentially put you out of business. 

A good provider will act as your go-to IT person, helping you to find new efficiencies through IT and improve your security resilience at a fraction of the cost of hiring someone full-time.

As your company’s security posture matures, a good IT provider will advise you on whether or not to consider cyber insurance, and can even help you find the best provider for your business. 

Using a managed IT service provider  is not only an investment in your IT infrastructure. It’s almost like its own form of business insurance. It keeps you from suffering significant losses due to unexpected IT events, and a managed IT support plan can cost you less overall than trying to handle your IT needs yourself. 

Boost your business’ cybersecurity defenses today! 

Unbound Digital can help keep your Johnson City, Tennessee business secure with a suite of services designed to ensure you’re following IT security best practices to avoid succumbing to an attack.

Contact us today to schedule a consultation. Call 423-467-7777 or reach us online.