Cybersecurity Insurance Premiums Are On The Rise. Here's Why...

• Legal fees
• Cost of experts to handle negotiations and/or regulatory issues
• Loss of income due to business interruption
• Credit monitoring services
• Public relations fees for reputation repair
• A ransomware demand (add-on feature in most cases)

One of the key reasons cybersecurity insurance premiums have sharply increased is because each year, payouts for ransomware attacks rise.

In 2021, Colonial Pipeline experienced a ransomware attack that cost the company $4.4 million in cryptocurrency. This attack was so significant that it drove up the price of gas across the United States. Working with law enforcement, Colonial Pipeline was able to only recover $2.3 million.

The losses associated with a ransomware attack are not just the demand for payment. As alluded to in the coverage list for cybersecurity insurance, the loss in productivity and revenue along with the fallout from exposing your customer’s data can result in a devastating blow to your reputation and bottom line.

In the case of a data breach or the inability to conduct business, public relations experts can help develop a crisis communications plan. This also requires your team to act fast, expend significant budget, and invest internal resources to coordinate with the PR team. Customers, the public, and internal staff need to know how the cyberattack impacts them and why they should still trust your organization.

Although the spotlight is often on ransomware attacks because of the large sums of money or cryptocurrency demanded, there are other ways that businesses are being targeted that are driving up loss ratios for cybersecurity insurance providers.

Business Email Compromise (BEC) incidents are also on the rise. BEC incidents can cost organizations millions—representing close to 60% of the top five internet crime losses in 2021, according to Microsoft. BEC is when  hackers impersonate a trusted business or person to trick victims into sharing data or credentials so they can steal from them. This includes sensitive data or money, depending on the goal of the cyberattack.

One of the largest supply chain attacks happened in 2020, when the US-based IT company, SolarWinds, was attacked. A domino effect occurred, infecting the computers of 33,000 unsuspecting customers with malware.

Because of these unpredictable risks, insurance carriers are asking for more robust documentation related to cybersecurity policies and incident planning. Some carriers are also reducing the coverage amount they offer, especially when it comes to ransomware attacks.

The one thing we know about the cybersecurity insurance landscape is that it continues to evolve as providers and experts learn more about the capabilities of cybercriminals.

According to Woodruff Sawyer, a US-based insurance provider who developed a Cyber Liability Looking Ahead Guide, governments are paying more attention and implementing laws to protect consumers impacted by cyberattacks on businesses and to prosecute those who are caught.

Privacy regulations including the EU’s GDPR, California’s CCPA, and Canada’s CASL have all made strides in protecting the privacy rights of consumers. Sanctions and reporting requirements instituted by governments have also helped reduce risk to consumers.

These regulations, however, are meant to protect and benefit consumers who may be exposed to a cyberattack as a result of doing business with your organization.

It falls to you to implement the controls and policies necessary to comply with these requirements. Business leaders need to take action now to ensure that their businesses and bottom lines are protected.

Don't let yourself be intimidated by cybersecurity insurance policies and premiums! Despite rises in cybercrime costs and threats, cybersecurity solutions and insurance are adapting to the evolving landscape and there are things you can do to protect your business and your data. Take stock of your security posture and steps to mitigate cyber risk. Not only could this reduce your premiums, it could reduce the likelihood of an attack in the first place. 

If you're looking for help with your security posture, we have added some more resources below for you to check out, or get in touch with one of our Bulletproof experts today through the form below.