The recent second quarter report by The Council of Insurance Agents & Brokers indicated that while commercial insurance prices saw an average increase of about eight percent, cyber insurance premiums jumped more than three times that, to nearly 26%. A school board in North Carolina saw a 235% price jump! The demand for cyber insurance continues to rapidly grow, so organizations seeking coverage should take note and be prepared.
Most should be aware of the major uptick in ransomware attacks (cause for 75% of the claims), but poor cybersecurity hygiene, blind risk management, and absent security awareness training for employees are adding to the price increases. Also contributing to the rise in premiums is an “alarming increase in frequency and severity of claims.” One chief claims officer went as far as to say, “for the cyber insurance market, this is our crisis moment.”
The resulting effect on businesses seeking cyber insurance coverage is not limited to higher expense. Insurers are demanding more robust cyber risk management plans and many more levels of cybersecurity best practices in place. It should be alarming that an insurance carrier needs to dictate the usage of multi-factor authentication in today’s environment! Furthermore, some organizations, trying to maintain cybersecurity protocols internally on their own, are failing their cyber insurance questionnaires and finding themselves seeking new carriers for coverage.
In today’s connected world, SMBs face a cyberattack every 14 seconds. Working with experienced cybersecurity professionals will ensure that cyber resiliency programs and policies are actively in place. Coupled with an effective disaster recovery plan, cyber risk management plans must be reviewed and revised every three to six months. Cybersecurity-focused manage service providers can also help organizations evaluate cyber insurance options and ensure policy compliance requirements are met. Sixty percent of SMBs close, following a cyber attack, due to legal damages and financial loss. Don’t become a statistic.