What do you need to know before taking out cyber insurance?
Cyber insurance is emerging as an add-on that provides another layer of protection to cybersecurity procedures. As demand for coverage increases, it is rapidly becoming one of the main concerns of MSPs and IT executives from businesses of all types.
According to recent studies, at the close of 2022, the cyber insurance market was worth between 11 and 13 billion dollars and these same reports suggest that it will continue to grow at a rate of 19% before 2030. In light of this trend, experts gathered for our webinar "Insuring Your Digital Future - Understanding Cyber Insurance Requirements" to discuss the importance of cyber insurance, analyze the range of coverage available, suggest how MSPs can find the right option for their customers, and help IT managers choose the policy that suits their business best.
Key types of cyber insurance coverage
As with other categories of insurance, there are different types of policies that cover expenses and liabilities when mitigating damage caused by a cyberattack. It is important to know about the range of products on offer and differentiate between them so that you find the right policy. The two most common types of coverage are listed below:
First-party insurance:
Covers any damage sustained by an organization in an attack. This includes everything from system interruption and replacement to the costs of the investigation to ascertain the causes of the crisis.
Third- party insurance:
Includes any damage caused to third parties. This ranges from ensuring the security of employee and customer data compromised to legal expenses for any potential external claims. In addition, it is important to note that there are different terms and conditions that depend on each type of policy that every policyholder must be aware of. In addition, it is important to note that there are different terms and conditions that depend on each type of policy that every policyholder must be aware of.
There are other key concepts that help us understand how cyber insurance works, including the following:
- Co-payment: in this case, the company undertakes to cover a small proportion of the expenses arising from an attack, while the insurers pay the rest.
- Coinsurance: this is a contract whereby your broker arranges for the services of two or more insurers to cover the same organization. Thanks to the broker's coordination, multiple policies are understood as a single policy. This type of coverage was created with the aim of splitting large company risk and lessening the impact on insurers.
- Reinsurance: this is insurance taken out by the insurance company itself to protect its own business. As in the case of coinsurance, the aim is to split risk as far as possible.
The more comprehensive the coverage, the better the response will be when it comes to mitigating an attack. This means both MSPs and IT managers need to be aware of the importance of having a policy that covers all eventualities to help the company recover after cyberattack damage.
Eligibility requirements for cyber insurance
Given the current demand for cyber insurance and the significant consequences that cyber-attacks have on businesses, anyone interested in taking out a policy is subject to exhaustive selection processes by insurers.
What do companies need to be eligible for cyber insurance?
Modern cybersecurity environment:
Greater protection translates into lower risk and increases the chances of getting approved for a policy. Deploying the latest cybersecurity measures, for example, endpoint security solutions such as EDR or EPDR technology solutions, as well as identity protection with multi-factor authentication or MFA, are practical and, with some insurance companies, essential for policy approval to shield access to a company's systems.
Regular backup:
An organization that thinks about the security of the data it stores reduces risk as well as costs for insurers after a cyberattack.
A cybersecurity team:
Having a dedicated IT security staff, either in-house or outsourced by an MSP, to deploy the appropriate measures is another requirement companies need to meet when applying for a policy.
Regulatory compliance:
Keeping up to date with current regional and international data protection regulations is also necessary for insurance policy approval.
Any business applying for cyber insurance must submit a document answering a series of questions related to its security measures. In addition, the insurer may require further information to gain a more comprehensive view of the applicant's needs and to confirm whether the company is eligible for a policy.
Cyber insurance can add value to your cybersecurity team by providing another layer of protection. MSPs and IT executives need to know all the details of these products as cyber insurance enables businesses to reduce costs in the long run and mitigates liabilities to customers and employees in the event of an attack.
If you’re interested in learning more about the importance of cyber insurance and how WatchGuard can help you adopt the necessary security requirements, be sure to check out our webinar Insuring Your Digital Future - Understanding Cyber Insurance Requirements or consult the following content on our blog:
- Without MFA won’t get coverage
- Insuring Your Digital Future: Understanding Cyber Insurance Requirements
