In the ever-evolving landscape of cybersecurity, selecting the right cyber insurance coverage can be one of the most important business decisions your company can make for the year.
According to IBM, the average cost of a data breach in 2024 is $4.88 million, and according to Check Point Research in Q2 of 2024, organizations experienced an average of 1,636 cyber attacks per week.
With the increased cost and frequency of these attacks, having the right coverage is crucial to making sure your business can financially recover after a cyber event.
Cyber insurance, also called cybersecurity insurance or cyber liability insurance, is an insurance policy that businesses can elect to have to cover losses due to a data breach or cyber attack.
The cyber insurance market started in the late 1990s when few companies thought about this coverage. The underwriting was detailed, and the market was mostly limited to technology-focused businesses.
Beginning in 2010, more and more carriers were entering the market and the supply far exceeded the demand. The underwriting process went from detailed to “quick and easy”. This remained the case until 2020.
Beginning in 2021, because of the significant increase in ransomware payments, the demand for this coverage increased dramatically and the supply began to tighten. By 2022, carriers began to become more selective in their underwriting of these policies.
Luckily, today’s cyber insurance market is starting to rebalance itself.
There are two primary types of cyber insurance – first-party and third-party.
First-party coverage occurs when the insurer pays for the organization’s expenses resulting from the data breach or cyber attack.
Third-party coverage occurs when the insurer covers damages or settlements from customer lawsuits related to the data breach or cyber attack.
Beyond these two primary types, business owners will need to determine which plan works best for their business. Some different examples of these plans include:
A cyber insurance rate or premium is what companies pay on a monthly or yearly basis in exchange for being insured in the event of a cyber attack.
Although it was believed just a few years ago that we’d only continue to see these rates increasing, according to Reuters, cybersecurity insurance rates are actually falling globally. In fact, from 2023 to 2024, companies saw double digit reductions in the cost of their cyber insurance.
Reuters went on to credit this reduction to organizations having better controls in place and the increased demand for cyber insurance. Overall, insurers observed a reduction in the number of claims filed.
The cost of cyber insurance varies depending on the size of your policy; however, the following factors can also play a key role in how an insurer determines your rate:
The cyber insurance deductible is the amount a company must pay before insurance coverage applies when a business files a damage claim.
The cheapest plan isn’t always the best option. Business owners should evaluate their business and determine which plan makes the most sense for their business.
Evaluating things like the amount and sensitivity of data, and how large your business is are both great first steps, but if you’d like additional recommendations, consider working with a company like Blue Pioneer Consulting.
There are three primary ways to reduce your cyber insurance rates:
If you’re interested in improving your current security measures or exploring other ways that you might be able to reduce your rates, reach out to the team at Blue Pioneer Consulting.
Our team of experts can assist with the submission process for your insurance coverage and can advise on security measures that might reduce your businesses overall cyber insurance spend.