Cybersecurity in a Changing Insurance Landscape
The?Current State of Insurance?
Looking back, 2021 has been a troublesome year for the cyber insurance market. According to Marsh’s Global Insurance Market Index report, the price of cyber insurance increased by 96% from the third quarter of 2020 to the third quarter of 2021 in the US with no indications of slowing down.?Cybercrime continues to climb and, and exacerbated by the COVID-19 virus, has taken a sharp incline across all industry verticals.?Reports by McAfee and Cybersecurity Ventures noted that the global losses from cybercrime topped $1 trillion in 2020, and further climbed to $6 trillion in 2021.???
While these figures are global, the US alone has seen a $700 million increase in cybercrime damage between 2019 and 2020 alone and it is expected to hit $10.5 trillion USD annually by 2025. It is widely believed that the market will continue to harden for several years to come. As such, insurance companies are responding to a hardening market in three ways, by reducing limits, increasing prices, and decreasing coverage.?
Reduced Limits?
No matter how much you press your broker, they can’t change the limits the underwriter has set. That said, you can secure an excess policy on top of your base policy. If you have a base of $1 to $3 million, most companies will still offer an excess policy to match that. This means that if your base policy has a limit of $2 million, you can get an excess policy of $2 million on top of this through a second carrier, effectively doubling your limits. It is important to note that most carriers will not?offer excess above $5 million.?
Decreased Coverage?
Many carriers have chosen to reduce their coverage. This is most often seen in packaged carriers who believe that, since you have most of your policies with them, you will not?change. Standalone cyber has increased by 28.6% in 2020 and is averaging close to 59% of total cyber policies. This is more than double the rate of growth compared to packaged cyber.?Shifts?like this?indicate a large?quality disparity. If you have your cyber policies with the rest of your package, this is a clear indication to start reassessing your cyber insurance options and look for another provider.?
Increased Prices?
Unfortunately, there is little?organizations?can do when it comes to price. As risk increases, so does the price of insurance. This means that a renewed focus on reducing cyber risk is the only practical action. In a report by?Ponemon?and IBM, they found that 2021 saw the highest average cost of a data breach in 17 years, with a total of $4.24 million. This figure is the highest in the report’s history, increasing by 10% between 2020?and?2021. In the next few years, it is expected that carriers will require advanced cybersecurity measures in high-risk industries such as healthcare, finance, and information technology to bind their insurance policies.?
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Cybersecurity in a Changing Insurance Landscape?
Modern day adversaries no longer discriminate by size nor industry. Faster and more sophisticated than ever, cyber?attackers?pose?a major threat for businesses,?their vendors, and their service providers.?As the insurance market?continues to grow?its dependance on robust?security,?what once was a ‘nice to have’ is now a hard requirement for businesses to obtain insurance coverage.??
Having the right cybersecurity strategy and stack in place?is crucial?for?protecting your business from advanced cyber threats such as ransomware. To help organizations?combat these threats,?Blackpoint?offers a streamlined and pragmatic cybersecurity ecosystem that works for you.?Our ecosystem?is?powered by our?proprietary?managed detection and response (MDR)?technology,?and?combines?an?experienced security operations center (SOC), 24/7 protection,?and cyber insurance?in?one single solution –?Blackpoint?RISK.??
Blackpoint?RISK?
Blackpoint?RISK was built from the ground up to?provide customized insurance for your operations and keep your clients safe.?Having?Blackpoint?RISK in your portfolio means receiving proactive services from experienced individuals, tailored policies to fit your specific industry and organization size, and access to a panel of breach response consultants.?Paired with our world-class, 24/7 MDR solution, get the ultimate one-two knockout combo: true managed detection and response?and?effective cyber insurance.?
Summary?
The fact of the matter is if you have data, you have cyber risk. No matter the industry, securing your network infrastructure is a 24/7 task. In an?ever-evolving?cyberthreat landscape?where?sophisticated cybercriminals move?rapidly,?make?robust cybersecurity?your?key strategy. Get customized cyber insurance and start mitigating your liability?now. For more information, contact?[email protected].?With?Blackpoint?RISK, live to fight another day.?
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