Tips to Survive Amidst A Declining Cyber Insurance Landscape

Posted on: Dec 19, 2022 | 3 mins | Written by: S. Gopala Krishnan

Tips to Survive Amidst A Declining Cyber Insurance Landscape

Published on December 19, 2022. EST READ TIME: 4 minutes

There are a lot of changes that are taking place in the landscape of cybersecurity. For starters, there is a constant threat of cyberattacks that are looming on organisations and companies alike. As attackers find more sophisticated mechanisms and ways to attack businesses, it has become even more pertinent to opt for cyber insurance policies.

Yet that is far from the truth. In recent times, insurance providers have hiked the premiums for cybersecurity insurance policies. The increase in policy premiums along with a few other mandatory requirements and restrictions in coverage is making it difficult for companies to continue with policies. However, not opting for a policy can make companies even more vulnerable to these attacks.

The State of The Cyber Attacks And Insurance Section

As of now, it is more expensive to buy cyber insurance and at the same time, companies might have access to limited policy coverage. A lot of companies will also find it more expensive to continue with the same coverage that they had on their existing policies. As an outcome, a lot of small businesses are either opting out of the policies or settling for a policy with lower coverage.

Due to a massive increase in ransomware attacks and BEC (Business Email Compromise) scams, insurance companies are constantly having to deal with the risks and payouts. This not only increases the loss ratios but also makes it difficult for them to offer coverage at similar premiums. A loss ratio is the total payouts that an insurance provider pays versus the total premiums that they have received. As the ransom amount increase, companies will have a higher loss ratio.

The Pandemic’s Impact On It

Over the past couple of years, there have been unprecedented cyberattacks. During the ongoing pandemic, a lot more cases of cyberattacks have come into the picture. These attacks make it even more critical for companies to opt for cyber insurance policies. However, during the same time, the focus on cyber security has been much higher than on cybersecurity insurance.

There are strong predictions for cyber insurance providers for the next few years. As more companies are likely to purchase policies. It is primarily because not enough companies have such coverage at this point. And the situation is due to the perception of companies.

A lot of organisations do not have a clear understanding of cybersecurity insurance and what it offers. Given the exponential increase in the number of attacks, these policies have become a necessity.

Top 5 Tips To Stay Prepared Against Cyber Attacks

To tackle the situation of cyberattacks, exploring a couple of solutions is the best approach. By following some of the following measures, companies can increase their resilience to cyberattacks. Once they have reduced their risks, they can opt for a cyber insurance policyfor added protection.

1. A considerable number of attacks in recent times have taken place due to weaker third-party entities. If an organisation deals with third-party vendors, it is imminent that they opt for a risk management program for these vendors.

These programs will constantly assess the systems and networks of the vendors for any vulnerabilities. The program will help companies bridge any cyber security gaps with their vendors and get them in line with the policies of the company.

2. The implementation of a zero-trust architecture is garnering a lot of interest among companies. It displays a defensive mindset of companies against such attacks. According to the zero trust model, the identity of a user and their access to systems is verified perpetually. These verifications take place even after receiving authorization in the first place. And specifically, before accessing sensitive data on the system.

3. A lot of industry experts believe that multifactor authentication should become a norm for all companies. In fact, a lot of cyber insurance policy providers seek multifactor authentication as one of the prerequisites to buying a policy. The beginning of a lot of cyberattacks is when the user credentials are stolen. And these credentials can then be used to disrupt the systems.

The authentication mechanism requires users to provide more than one verification factor, post which they can access a system. However, it can be a hindrance for a lot of users. As a result, biometric solutions or decentralized pin is becoming more popular to implement multifactor authentication.

4. Lack of adequate training or awareness has often been related to a lot of cyberattacks that take place. A company can have a sophisticated and expensive cybersecurity system in place, but none of it would matter if an associate hands over a key to the network, unknowingly.

Employees becoming victims of cybercrimes isn’t new. Yet, it must be dealt with with a strong hand, or else other investments are instantly nullified. Companies must design effective awareness programs surrounding phishing, social engineering, malware, impacts of a data breach, ransomware, etc. This would also aid in the process of securing a cybersecurity policy, as insurance providers look for such awareness programs.

5. Apart from the above, companies must also invest in a reliable data backup mechanism for their systems. In the event of a ransomware attack, recovering the system with the help of backups might be the only feasible solution. Creating a reliable and sturdy data backup system will enable companies to fall back on it, in such times.

Companies can implement a lot of other defensive techniques against these data backups. Measures such as updating the systems with the latest security patches, keeping all the antivirus updated, and constantly monitoring for data leaks are all under the control of a company.

The above actions can be helpful to companies in more than one way. For starters, it strengthens the cybersecurity of a company, since a lot of them are proactive and defence mechanisms. On the other hand, these display the willingness of companies to lower their risks of cyberattacks and will aid in the process of buying cyber insurance for the organisation.

Some of these actions can hold even greater importance based on the type of business that a company is involved in. For example, vendor risk management programs are essential for healthcare-based companies, since there is a lot at stake.

Depending on the insurance provider, some of these might even be a mandatory requirement before you can buy the policy.

Conclusion

There has been a massive increase in the number of cyberattacks across the globe. More cyberattacks along with increasing premiums costs aren’t a good combination. However, not opting for cyber insurance policies can have catastrophic impacts. Above are some of the actions that companies can implement to reduce their exposure to cyberattacks and lower their risks. The above measures might even help you to bring down the policy premiums, making them a bit more accessible than now.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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