A cyberattack is one of the most frightening scenarios that a business can face. And according to cybersecurity experts, will only increase in frequency. If your company deals with customer information or money then you are at an increased risk for cyberattacks. In this article, we look at how cyber insurance works and why every financial firm needs to have it as part of its cybersecurity strategy.
WHY DOES MY FINANCIAL FIRM NEED CYBER INSURANCE?
A cyberattack can cause significant damage to a company, and cyber liability insurance protects against these effects when they happen. In the event that there is an attack, cyber liability insurance will pay for any damages incurred. This means that if sensitive company data or personal customer data is leaked or compromised, then their insurance covers the costs of recovery.
Cyber insurance is a must for financial businesses in particular. You hold vast amounts of sensitive data. If you’re in an area like banking or investments, you hold customer money as well. You’re a valuable target for attackers. A successful breach or social engineering attack could quickly net thousands or even millions of dollars. Your insurance provider reimburses you and often your customers if data or money is stolen, and pays for recovery costs.
Additionally, the SEC heavily recommends cybersecurity insurance and seems to be close to mandating it for all financial companies. They’ve begun issuing fines to companies with inadequate security protections. And as more cyberattacks hit firms like yours, both insurance and fine costs will likely go up. It’s much better to obtain cybersecurity insurance now before the demand skyrockets.
WHAT ARE THE BENEFITS OF HAVING CYBER INSURANCE?
- It provides a sense of security knowing that your company is protected in the event of a cyber attack.
- Currently, it offers low rates and comprehensive coverage.
- It covers any damages caused by an attack, helping ensure you’re not financially responsible for sometimes millions in damages and recovery costs.
- It helps protect customer and company money and data.
- Your customers will feel more secure when they purchase products from you, knowing cyber insurance protects them and their data.
HOW MUCH COVERAGE SHOULD I GET FOR MY BUSINESS’ NEEDS?
Tailor your cyber insurance coverage to your business requirements and risk. For example, a cyberattack that only affects the company’s finances and operations may require cyber liability insurance with a $1 million cyberattack coverage limit.
On the other hand, if there is a cyberattack on a company’s data that compromises customer information, then cyber liability insurance with a $5 million cyberattack coverage limit would be more appropriate.
If you are not sure of what cyber insurance policy is right for your business, contact your broker or risk management professional to get guidance.
WHAT ARE THE REQUIREMENTS FOR GETTING CYBER INSURANCE?
To qualify for cyber liability insurance, firms must pass cybersecurity checks and audits. These checks determine if the company’s cyber defenses are up to date and able to withstand cyberattacks. Additionally, they will verify that your data is secure at all times. No provider will insure a business that isn’t taking proper security measures as that’s a massive risk to them.
Businesses seeking coverage will need to show proof that they are not a security liability via a third-party cybersecurity assessment. Insurance firms will usually accept assessment results from any reputable IT or cybersecurity firm. However, it’s always a good idea to double-check prior to contracting a company for this. The IT/cybersecurity consultant should also help you remedy any lacking areas required by your insurance company before they will approve your policy.
Willingness to comply with constantly changing regulations is also a plus for a quick and easy approval. This often includes adhering to the latest industry standards, as well as requirements imposed by the state or country where the firm operates from. Compliance means that your company should be taking preventative measures against breaches. This includes encrypting crucial data and making sure all systems have up-to-date, modern cyber protections.
HOW MUCH DOES CYBER LIABILITY INSURANCE COST?
It may surprise you to hear that cyber liability insurance is extremely affordable. Many comprehensive policies only cost $1-2k/year.
While your policy rate will depend on the coverage needed and a few other factors, coverage rates, in general, are lower than what other insurance premiums would be.
IS IT TIME TO LOOK INTO INSURANCE FOR YOUR FINANCIAL BUSINESS?
Cyberattacks are a constant threat to businesses of all sizes and cyber liability insurance is an affordable solution. It provides peace of mind, as it covers any damages caused by cyberattacks, helping ensure you’re not financially responsible for sometimes millions in damages and recovery costs.
If your financial business isn’t taking the necessary security measures or if you don’t have cyber liability coverage yet, contact your broker or risk management professional today to get guidance on what cyber insurance policy will be best for your company’s needs.
And if you’d like to perform a cybersecurity audit at your business, get in touch with us! We can see where you’re at and fix any areas that need improvement before you can be successfully approved for cyber insurance.