Cyber Insurance Update 2023: What’s Changed and What You Need to Know
Download MP3 What is Cyber Liability Insurance?
- A unique type of risk coverage designed for businesses facing digital threats, including data breaches, hacking, and ransomware attacks.
History of Cyber Liability Insurance:
- Launched in the 1990s to protect .com companies from data destruction, hacking, and viruses.
- Early 2000s: Laws in some states, like California, required companies to notify customers if their data was breached, expanding the role of cyber liability insurance.
Evolution of Cyber Liability Insurance:
- The biggest priority now is data protection and covering costs related to data breaches.
- Introduction of ransomware: Hackers threaten to release or delete sensitive customer data unless a ransom is paid.
Challenges in Pricing and Predicting Losses:
- Cyber insurance is different from traditional types like fire insurance due to its relatively short history (20-30 years).
- Lack of historical data makes it hard for insurance companies to predict the cost of cyber losses.
Changing Types of Risks:
- Exfiltration of data is becoming more common than just hacking or ransomware.
- In 2019, cyber insurance had to adapt quickly to address the rise in ransomware attacks, which hold systems hostage until a ransom is paid.
How Cyber Insurance is Adapting:
- Cyber insurers now require businesses to have specific cybersecurity protections like two-factor authentication and proper password management.
- Insurance companies assist in reducing risks by sharing data on previous cyber losses, helping businesses mitigate future threats.
Proactive Measures to Lower Cyber Insurance Premiums:
- Two-factor authentication and endpoint detection (EDR) are effective tools in preventing malware.
- Insurance companies can use their data to help businesses reduce the frequency and severity of cyber attacks.
Cybercrime and the Growing Risk:
- Unlike accidental damages (e.g., fires), cyber threats are intentional and profitable for hackers, making them more innovative.
- Cyber insurers help businesses stay ahead by implementing preventive measures and offering guidance on keeping systems secure.
The Future of Cyber Insurance:
- As the digital economy grows, cyber risks will continue to increase, but so will technologies to defend against them.
- The cyber insurance market is projected to grow significantly, with premiums expected to reach $50 billion within the next decade.
Conclusion:
- Cyber losses are inevitable, but proper insurance coverage and proactive measures can reduce the impact of a breach.
- Businesses should work with a knowledgeable insurance agent to ensure they have the right coverage to match their needs.
Interested in Cyber Insurance?
- Check out our website for more information, and consult with a qualified insurance agent to secure the best coverage for your business.
