Before requesting an insurance quote, there are a few important considerations to keep in mind regarding how these insurance premiums are calculated. A company may be able to take steps to reduce their overall cybersecurity risk and related costs for insurance premiums.
Cyber insurance, also called cyber liability insurance, is an important resource that helps businesses manage their cybersecurity risks. The industry has experienced rapid growth in recent years as the number of cybercrimes (and associated costs) has increased, and there is a greater awareness of cyber insurance among many industries. Most companies these days manage a vast amount of digital data, and it’s often necessary to take certain measures to protect these assets.
A cyber insurance policy can be tailored to meet the needs of any business, regardless of its size and extent of operations. Before requesting a quote, there are a few important considerations to keep in mind regarding the quoting process and how these insurance premiums are calculated. A company may be able to take a number of actions to reduce their overall cybersecurity risk and related costs for insurance premiums.
After a review of available cyber insurance coverage options, the easiest way to proceed is to request an online quote. An online quoting tool will ask a series of questions that usually begin with understanding the location of your business and the industry that it supports. At this point, a digital audit may be done of the corporate website to understand the underlying security practices and any potential cybersecurity vulnerabilities.
For very large and complex businesses, an onsite audit may be performed by the insurance underwriter to review additional details regarding risk management practices. As we’ll discuss in a later section, there are a number of steps that a company can take to reduce its cybersecurity risks. At this stage, a business will often receive a detailed quote and may wish to compare service offerings and coverage details among a few select vendors. After cyber insurance coverage is started, risk assessments are often performed at regular intervals to determine if any factors have changed, increasing or decreasing the insurance premium for the next coverage period.
Cyber insurance coverage is typically divided into two forms, first-party and third-party. First-party coverage represents direct costs that a company may incur as the result of a data breach or cybercrime event. Third-party coverage represents legal fees and other costs associated with litigation and third-party actions against the company as a result of the cyber event. In all cases, the specific quote that a company receives is unique and requires a complete assessment of business risk factors.
In general terms, a small business may be able to acquire a cyber insurance policy for around $150 per month, while large corporations could spend significantly more given the proportionally larger damages that could be incurred. An assessment of your unique business risk and potential cost liabilities can help you estimate the potential return on investment (ROI) of a cyber insurance plan. In the United States, the average cost of a small business cyber insurance claim related to a system glitch is $1.9 million, while the average organizational costs associated with a data breach is $8.6 million.
There are many potential factors that can impact the insurance premium of a cyber insurance policy. Some factors, such as industry and company size, are relatively static, while other considerations related to cybersecurity practices can be directly influenced by the business. Here are a few of the most common factors that may be worth reviewing.
A cyber insurance policy can be a valuable way to protect a company’s assets and business interests. Minimizing disruptions in the event of a cybercrime or data breach is a major priority for cybersecurity professionals, and it is important to understand your risk when requesting cyber insurance quotes. With careful planning, it is possible to research and select a cyber insurance plan that complements a business’s cybersecurity practices and helps reduce risk and liabilities.