In short, yes. In today’s modern world, more and more businesses are seeking cybersecurity insurance for data compliance and financial foresight reasons. This is reflected by the increase in the global market for cybersecurity insurance, which is expected to grow to $20.43 billion by 2027. For insurance providers who want to expand their offerings, cyber insurance can be an attractive prospect. Offering cyber insurance may seem daunting, a lot of risk potential. Afterall, cybercrime rates continue to increase and claims can carry a hefty price tag. Providers must understand what they are offering in order to provide a win-win solution for both themselves and their clients. We’ve put together this brief guide to help you understand the ins-and-outs of cyber insurance and how to write policies that work for you and your clients. Let’s get started.
What Is a Cybersecurity Insurance Policy?
A cybersecurity insurance policy helps recoup financial losses after any type of cyberattack—like malware, ransomware, denial-of-service (DoS), etc. Providers can offer coverage in two categories:
First-Party Coverage: As the name suggests, this type of policy only applies to the business that bought the insurance. It is designed to protect primary financial interests.
Third-Party Coverage: This type of policy applies to the insured company’s clients. It is designed to protect financial losses of those third-parties, and is essential for tech companies and IT consultants.
Some companies may be interested in both first- and third-party coverage, and providers can tailor their policies depending on their customers. With Trava’s help, it’s easy for providers to assess what risks clients have so that polices can be written to cover their specific situation.
What Is Covered Under Cyber Insurance?
It depends on the specific policy, but cyber insurance may cover situations like:
Malicious destruction of your data by a bad actor.
Denial of service (DoS) attacks, where a device or network is rendered inaccessible to authorized users.
A virus, malware, or spyware is planted on your computer’s hard drive.
Your database is accidentally deleted or destroyed by a careless employee.
A server is completely wiped out by a power surge.
Files and data are held ransom by cybercriminals.
Your client is hacked and sensitive data (like Social Security numbers) was stolen.
What Isn’t Covered by Cyber Insurance?
Each policy will vary, but typically cyber insurance will not cover situations like:
Reimbursing future profits lost due to a cyber event.
Legal expenses and lawsuits for potential cybersecurity risks that existed before the incident.
Any losses resulting from intellectual property theft.
Foreign cyber criminal attacks.
Improvements to cybersecurity after attacks.
How Much Does the Average Cyber Claim Cost?
The average cybersecurity insurance claim cost for a small to medium enterprise is $345,000. The average claim for all organizations is $812,360. In context, when looking at the average cyber claim it’s important to note that 99% of all cybersecurity insurance claims originate from small to medium enterprises (annual revenue under $2 billion).
What Are the Benefits of Cyber Coverage Offerings?
The real question is: can you afford not to provide cybersecurity insurance? In today’s digital landscape, businesses have an increasing need—not a want—for these policies. Adding or expanding cyber insurance is an essential offering for providers to meet their clients’ needs.
What Are the Cyber Insurance Challenges for Providers?
Cyber insurance considerations ultimately boil down to one challenge for providers: appropriately determining risk. Unfortunately, the current risk assessment standard involves using a cyber insurance PDF, an outdated and time consuming method that won’t give providers a clear picture. With Trava, you can use modern tools for a modern task: efficiently and effectively assessing cybersecurity risk levels. And that’s not all! We streamline assessment, underwriting, readiness reports, and more to ensure that you can write policies that cover your clients and your agency.
So, Is Offering Cyber Insurance Worth It? Yes, With Trava by Your Side!
Despite the challenges, offering cyber insurance can be a beneficial endeavor for your agency—especially when partnering with cybersecurity experts like those you’ll find at Trava. We’ll help you answer questions like:
Do your customers use multi-factor authentication to limit unwanted access?
Are they offering cybersecurity training for new and existing employees?
Is data backed up to a separate server?
Are vulnerability tests run on a regular basis to identify weaknesses?
Is network security actively updated?