When businesses coordinate cyber insurance policy coverage, they undergo an assessment process during which there is an evaluation of their potential risk exposures and the extent to which they are mitigated, a process known as cyber underwriting.
This method enables firms to determine appropriate coverage and pricing for potential clients in the event of a cybercrime.
Although robust cybersecurity programs should be additionally utilized to proactively guard against inevitable threats, insurance is crucial for assisting businesses with rebuilding and replenishing assets lost to cyber attacks.
Once an organization has proper prevention and detection measures, it is recommended they transfer any remaining risk over to a cyber insurance policy.
What Does Cyber Insurance Cover?
Whether through ransomware, data exfiltration, or a myriad of other cyber extortions, hackers commit cyber attacks at a near-constant rate—around every 39 seconds, according to a study from the University of Maryland.
Cyber insurance helps protect businesses’ valuable assets from damage in the event of an attack.
Though policies vary in liability, deductibles, among other factors, the following items have often been covered by insurance policies in the past:
- Data Damage, Loss & Restoration
- Damaged or Destroyed Hardware
- Interrupted Business Operations
- Cyber Extortion
- Costs Required to Notify Customers About a Breach
- Forensic & Legal Investigation
- Credit Monitoring
Now, some of the aforementioned events may be excluded from traditional policies, in addition to bodily injuries, property damage, acts of war/terrorism, and fraud or intentionally harmful actions taken by the business.
What Risks Do Underwriters Assess?
When determining appropriate coverage and pricing, cyber insurance underwriters evaluate several areas of exposure and the extent to which they can be mitigated through risk management.
Firms may evaluate the following:
Given the substantial cost of the average data breach—around $8.64 million, according to the 2020 “Cost of a Data Breach Report” by independent research center Ponemon Institute—insurance firms typically assess whether the organization has enlisted cybersecurity services during their underwriting process. They may look to see results of a penetration test on a company’s network and related domains to identify any vulnerabilities. They also will look for deficiencies such as unclosed or unused remote desktop protocol ports, insecure endpoints, and lack of detection capability and multifactor authentication, among others.
Underwriters also verify businesses’ organizational policies and procedures, gauging whether confidential data is separated across multiple interfaces to protect against total loss in the event of a breach. They might also determine whether data backups are stored in locations other than on premises.
Cyber Risk Quantification
By determining the financial impacts across varying cyber threats, businesses can allocate resources accordingly—a strategy known as cyber risk quantification. While only 17% of companies report doing so, according to a survey from multinational professional services network PwC, the absence of this planning poses a significant risk factor.
In comparing security postures alongside other related companies—known as benchmarking—insurance agencies can understand risk management effectiveness throughout an industry. This enables underwriters to understand the appropriate coverage limitations of a prospect’s policy.
Why It's Important to Have Cybersecurity & Cyber Insurance
Though cyber insurance is a vital facet of a company’s security strategy, it should be supplemented with the services of a state-of-the-art cybersecurity provider.
It’s possible firms might only underwrite prospects with proof of security controls, but the necessity of expert security services goes far beyond this.
In the harsh, devastating, and ever-evolving cybercrime landscape, the most effective way of combating attacks is to detect and neutralize threats before they launch.
This can be accomplished by combining cyber insurance with advanced, 24/7/365 network and endpoint security monitoring technology to proactively assess and mitigate risks.
Full visibility into your corporate security posture at all times enables experienced cybersecurity experts to seamlessly detect when a threat has penetrated the network— and contain it.
Cybersafe Solutions is an advanced managed security provider specializing in Security Operations Center as a Service (SOCaaS) through managed detection, response, and containment. With more than 20 years of experience, our expert team of certified specialists utilizes cutting-edge technology to safeguard your most important assets. Contact us today to learn more.