Cybersecurity Insurance - what's changing and what should you be aware of?

Cybersecurity insurance is still a pretty new concept for many SMBs. It was initially introduced in the 1990s to provide coverage for large enterprises. It covered things like data processing errors and online media.

Since that time, the policies for this type of liability coverage have changed. Today’s cyber insurance policies cover the typical costs of a data breach. Including remediating a malware infection or compromised account.

Cybersecurity insurance policies will cover the costs for things like:

• Recovering compromised data

• Repairing computer systems

• Notifying customers about a data breach

• Providing personal identity monitoring

• IT forensics to investigate the breach

• Legal expenses

• Ransomware payments 

Data breach volume and costs continue to rise. 2021 set a record for the most recorded data breaches on record. And in the first quarter of 2022, breaches were up 14% over the prior year. 

No one is safe. Even small businesses find they are targets. They often have more to lose than larger enterprises as well. About 60% of small businesses close down within 6 months of a cyber incident.

The increase in online danger and rising costs of a breach have led to changes in this type of insurance. The cybersecurity insurance industry is ever evolving. Businesses need to keep up with these trends to ensure they can stay protected.

Here are some of the cyber liability insurance trends you need to know about.

Demand is Going Up

The average cost of a data breach is currently $4.35 million (global average). In the U.S., it’s more than double that, at $9.44 million. As these costs continue to balloon, so does the demand for cybersecurity insurance.

Companies of all types are realizing that cyber insurance is critical. It’s as important as their business liability insurance. Without that protection, they can easily go under in the case of a single data breach.

With demand increasing, look for more availability of cybersecurity insurance. This also means more policy options, which is good for those seeking coverage.

Premiums are Increasing

With the increase in cyberattacks has come an increase in insurance payouts. Insurance companies are increasing premiums to keep up. In 2021, cyber insurance premiums rose by a staggering 74%. 

The costs from lawsuits, ransomware payouts, and other remediation have driven this increase. Insurance carriers aren’t willing to lose money on cybersecurity policies. Thus, those policies are getting more expensive. This is at the same time as they are more necessary.