The Expert Podcast

I'll bet in the next year to two thousand twenty two or twenty three your business is going to have a need or interest in looking at cyber liability insurance. this is not something you probably had on your radar screen in the last three four years if ever. and it's something that may be a new consideration for your company. so when you look at cyber liability insurance how do you know what's a good premium cost. what are good coverages and more importantly how can you keep your premiums at the lowest possible amount.
when you shop around for other types of commercial lines insurance things like general liability insurance or fire protection or commercial auto most of the time when you shop from one carrier to another you'll find that the prices are about the same there may be some variation. in addition it is very industry specific but with cyber liability insurance because of the fact that this market has only existed for a short period of time many insurers did not have a very well researched risk history to know how much to charge for insurance. they found that in the last five or six years a lot of these policies were underpriced. so now the re pricing them some of these premiums are going up a hundred percent double so how do you keep your premium policy lower. well the easiest way to do it is to buy a policy and listen to what the insurer tells you. buy a policy from the biggest company that you can find because they will have the most data. they will have the most information about what their losses are. if you buy from a smaller company even if the premium is lower it actually could cost you more in the long run. here's how let's say you buy cyber liability insurance from X. Y. Z. Joe schmo insurance company
maybe they're not bad they're not out to try to do wrong but if they're not a large company with a significant risk analysis history they're not gonna be able to advise you on how to prevent a cyber liability claim. so now you're paying a low premium you know low policy cost a year two goes by and you have a claim. because you didn't prevent these things from happening. even if the company pays now what do you have now you have a claims history. do you remember every time that you applied for insurance under all your policies one of the first things that the insurer asked you was for your loss runs.
what are your loss runs well claims did you have those lost runs helped the underwriter determine if you're eligible for coverage and if you are how much it's going to cost. so if you buy cyber liability insurance from a company that does not have really good inventive measure knowledge you're more likely to have a claim because nobody really has the experience in doing this. now you're gonna go to renew your policy or maybe go to another company and you can have a claims history and you might get not renewed you might not be able to get a policy or it's going to be through the roof. if you buy insurance from a larger company even if the rates a little higher may not be her maybe lower that company is more likely to be able to advise you on what things to do to prevent losses. they're going to be experiencing losses every single day across their portfolio across their book of business. every time they have a claim they're going to see how the heck did this happen. what went on with are insured oh they came in through this firewall oh this were type of router has a problem and they got an email from a LinkedIn fishing account whatever it is they're going to know how these things happen and they're gonna send you an email. every week Hey lockdown this router don't let your employees use this type of password whatever it is they're going know when they're gonna tell you they will be very easy things to implement in your company. if you implement them you'll be less likely to have a claim. so you'll be able to keep your policy in place you will not get non renewed. you'll be less likely to have a claims history which would put your rates through the roof later. and more importantly you won't have a claim or loss to begin with because even if you have insurance for any type of loss whether it's fire theft damage cyber liability slip and fall anything even after the claim is paid and all the dust settles you still wish that it didn't happen you don't come out ahead. the policy might pay you for some of the losses in some of your you know business interruption replacement value whatever it is but you still have to go through that process and there's going to be deductibles. there may be loss of business that isn't covered. so by avoiding the loss to begin with you have so many advantages. one is you don't have to deal with the hassle of that event to begin with. second your policy will remain intact because you don't have a loss or run loss ratio A. ends you'll be able to shop a among a larger range of markets in the future. if you're working with a broker or your agency has different markets that they draw from to provide you with options for coverage having no losses will have a wider range of options available to you two three five ten years from now. where if you have losses you might only be able to pick from two instead of ten and those might not be good companies or not as good companies. they might not have a good coverage the rates might be higher might have higher deductibles. so by working with a larger insurance especially with cyber liability in the long run you could come out ahead. even if you pay a little more for the policy probably not gonna be that much more but even if you do. according to the experts ransomware attacks increased a hundred percent twenty one average rate hundred seventy thousand moreover remediation costs are ten times the amount of the ransom payments. so even if the ransom payment was a hundred and seventy thousand the other cost to fix everything is still in the millions. even if it's all covered which it probably won't be this probably exclusions in your policy. you still have to go through that process. the weeks or months of dealing with not having your data and not be able to contact clients employees having stress maybe losing good employees. the frequency of these attacks have the cyber insurance industry alarmed. security level say they're bored at these insurance companies is seeking to re visit their ransomware protection levels. who do you think that is going to be the first ones are gonna drop or non renew the ones who had claims or the ones who are new customers. ransomware has been the highest profile risk and cyber security market has hardened meaning that there's less availability of coverage. insurers have withdrawn it's tougher for customers to get insurance at all let alone good value on a policy. if you are already in place with a good insurer you're much more likely to be able to retain this type of coverage. organizations will have to make a shift and prove the strength of their cyber protection level to insurers to drive premiums down. most businesses are willing to do this but are not ready to. the reason why not ready to is because they don't know what to do. you as a business have a laugh to think about with your own industry. how do you get more customers how do you manufacture your product how do you keep employees. you don't have the ability to keep up with the different cyber protection things are out there you don't know about them. you don't happen to you which is good but if you're in with a good insurer who can tell you what you have to do and help you do it in some cases that'll make your job in your life a whole lot easier. so look to get cyber liability insurance sooner than you thought you would want to because it might be easier to get into the market now than two or three years from now. and once you have good coverage with a larger carrier you'll have set yourself up for better protection down the road. look a lot of the companies from the nineteen twenties and thirties that were the first to get fire insurance protection from the fire insurers had less likelihood of their place burning down because they knew you should put a sprinkler system. that make sure you don't put you know oily rags next to the heater. they knew what caused fire. so they protected these companies the same is happening within the new infancy industry of cyber liability so use that to your advantage you come out ahead it's also a competitive advantage. if you're doing this in your competition is not you're gonna be less likely to be the one shut down for two or three days because your service got hacked where your fiercest competitor is gonna lose that valuable advantage and you might be able to leapfrog ahead because you're safe and secure and you don't have hackers locking down your servers or breaking all your technical connections