Even though the cybersecurity insurance market is barely 20 years old, cybersecurity insurance companies have already collectively grossed more than $2 billion in premiums. This implies both good news and bad news. The bad news is the demand for cybersecurity insurance demonstrates that hackers and data thieves are stepping up their game. Businesses and industries of all sizes are being targeted. The good news is that large organizations and small businesses alike are taking proactive steps to protect themselves from cyber threats.
As the cybersecurity insurance market continues to expand, SMBs will want answers to questions before procuring this insurance for their operations. Below are a few common questions companies consider before selecting a provider.
How likely is it for an SMB to be targeted by a cyber attacker?
By one measure, more than half of all cyberattacks target SMBs. Sure, SMBs typically do not store or maintain the same volume of data that is held by larger companies. But that doesn’t mean they are out of the wood. Small businesses generally have fewer resources and defensive technologies as compared to their larger peers. In other words, SMBs hold less data, but that data is easier to steal.
What does cybersecurity insurance cover?
Cybersecurity insurance policies can cover multiple different losses and liabilities associated with a data breach. This includes business downtime, extortion, data recovery, and fines levied by regulatory bodies. Some policies go even further to provide against third-party liabilities. Prime examples include a failure to protect their confidential data and legal fees. Of course, exact coverage details will depend on your policy. So be sure to suss out the specifics during your initial conversations.
Do all cybersecurity insurance carriers cover the same types of losses and liabilities?
Coverages from different insurance carriers do overlap, but some carriers offer different services and underwriting policies than others. Many of the world’s top commercial general liability insurance carriers (including Liberty Mutual, Beazley Insurance Co., Chubb Ltd.) are now offering cybersecurity riders on their policies.
Other insurance entities have been formed by individuals that have more technical knowledge of cybersecurity threats. Companies like Root9B, RSA, IBM Security, Dell Secure Works, and Palo Alto Networks all boast top-notch technical cybersecurity expertise. Meanwhile, companies like CyberPolicy offer SMBs an opportunity to shop through cyber insurance companies according to specific needs. Carriers include Hiscox, Aspen Insurance, and Hanover.
How much should an SMB budget for cybersecurity insurance?
Cybersecurity insurance policy premium costs will vary as a function of each SMB’s network systems environment. Annual premiums for $1 million of coverage will generally be between $5,000 and $50,000. Given that an SMB incurs an average loss of $200,000 from a single data breach, these premiums are readily justified on a cost-benefit basis.
Will cybersecurity insurance companies offer cyber threat abatement consulting services?
Many cybersecurity insurance companies work closely with their clients to detect likely cyber penetration points and to make suggestions to close off those gaps. Root9B, for example, will pursue cyber attackers that have broken into a system and will expunge those attackers while closing off the gaps that let them in. Dell Secure Works audits client systems to identify weaknesses. Palo Alto Networks works to stop a security breach as it is happening with threat-intelligence and other protection tools. Cybersecurity insurers are as interested in ending data breaches as their clients are in preventing them, and good carriers will always work with their clients to reduce threat levels.
What is an SMB’s ultimate risk if it fails to procure cybersecurity insurance?
Believe it or not, the worst case scenario is bankruptcy. The costs associated with even a low-level data breach are often large enough to wipe out an SMB’s profits. Cybersecurity insurance is as critical. Without this essential service, you could suffer a cyberattack that kills your SMB for good.