Five to ten years ago, businesses used cybersecurity insurance more as a precaution than a necessity. Large payouts for cybersecurity breaches were rare and not significant enough to break the bank, which meant those kinds of insurance agencies were making money and keeping it.
In contrast, insurance agencies today are facing financial payout after financial payout because of the prevalence of cybersecurity breaches. As a result, insurers decided it’s time to rewrite the rules. If you fail to follow their cybersecurity guidelines for your business, you may lose coverage when you need it most.
1. Many Businesses Are Investing in Cybersecurity Insurance
60% of small businesses close within six months of being hacked. Additionally, small businesses are targeted more often by cyber criminals because their security is easier to breach.
That’s why more small businesses are investing in cybersecurity insurance than ever before. In order to better protect these businesses and themselves, it’s more common for insurance agencies to make more elaborate security requirements.
2. Without Certain Security Measures, Cybersecurity Breaches Aren’t a Matter of “If”, but “When”
Studies predict that ransomware damages will hit $20 billion in 2021. In contrast, around five years earlier, damages from ransomware were well below a million!
Needless to say, insurance companies can’t afford to foot the bill for what’s predicted. As a result, Multi-Factor Authentication and other basic security measures will be required by insurance agencies before they’re willing to insure.
3. Lack of Security Requirements Hinders Business Growth
Legal requirements that affect industries such as healthcare, legal, and insurance companies make it even more difficult to do business without proper security measures in place. And for every industry, trust is a very important component of the client relationship.
If your business isn’t protected, it isn’t the only data source at risk. You face the challenge of protecting your clients’ data as much as your own. However, insurance agencies can’t be responsible for the data of their clients AND their clients’ clients! Therefore, the fine print is even finer in their policies, and the stakes are even higher for the business owner.
What Do These New “Rules” Mean for You & Your Business?
The biggest issue you should be aware of is that even if you’re paying for cybersecurity insurance, you might not be insured.
It’s important that you understand the terms of your insurance. If you don’t comply with the terms your insurer requires, you may not be eligible for the actual coverage you’re paying for!
By following their guidelines and investing in proper cybersecurity best practices, you can protect yourself, your business, and your clients from a very frustrating and costly security breach. You can also make the most of your coverage if you choose to have it. Remember – without basic security measures in place, it’s not a matter of “if”, but “when”.
In short: Check your policy, contact your agent, and make changes.
Please let us know if you have any questions or would like to learn more about cybersecurity insurance or the best measures for securing your business technology. We help people like you!
