The Importance of a Cybersecurity Assessment for Cyber Insurance – by Dan Hucal
As cyber threats continue to evolve and become more sophisticated, relying solely on strong cybersecurity measures may not be sufficient to protect your organization. It’s not a matter of “if” cybersecurity incidents will occur, but rather “when.” That’s why many organizations turn to cyber insurance as a financial safety net against cyber risks.
What is Cyber Insurance?
Cyber insurance is a form of business liability insurance designed to safeguard organizations against cybersecurity risks. Since its inception in 1997, cyber insurance has become widely used to protect businesses from substantial losses caused by cyber threats such as data breaches and cyber extortion.
The escalating number of cyber threats and their impact on organizations across industries underscores the need for financial security. According to Cybersecurity Ventures, global cybercrime costs are projected to reach $10.5 trillion annually by 2025, which is $3 trillion more than in 2015. These costs encompass various losses, including data destruction, theft of personal and financial information, intellectual property infringement, post-attack business disruption, mitigation and restoration expenses, and reputational damage.
What Does Cyber Insurance Cover?
Cyber coverage is not standard, as it is dynamic and varies among insurance companies. However, here are some common areas covered by cyber insurance:
Forensic Investigations: Cyber insurance covers the costs of investigating a cyber incident to identify its cause and extent.
Legal Assistance: If legal action is necessary due to a cyber incident, insurance can help cover legal fees.
Extortion Payments: Some policies cover ransom payments in cases of cyber extortion (e.g., ransomware attacks).
Mitigation and Restoration: Expenses related to restoring systems, data, and operations after an incident may be covered.
Reputational Damage: Insurance can help mitigate reputational harm caused by a cyber event.
Preparing for Cyber Insurance Application/Renewal
When applying or renewing cyber insurance coverage, strongly consider a Cybersecurity Assessment to help you fill out the insurance questionnaire and provide the information that the insurance company is requesting. There are multiple reasons to do this that have been listed below.
The applications are becoming increasingly comprehensive and request many items of data proof that need technology experts to properly fill out.
Insurance Data Requests are usually sent to the CEO or company owner. The documents may contain technical questions requiring the help of a cybersecurity expert to properly complete the documentation.
An internal IT employee may not always be completely honest or the best person to answer when filling out these forms for job protection reasons.
Having a trusted 3rd party technology expert like SKB Cyber helps you fulfill your data request, ensures no conflict of interest and a properly answered application. A wrong answer or guess to any question can be the reason for a claim renewal or denial. There are many times a company has breezed through the data requests and believes they are protected. When it comes to a cyber claim, the information you provide will be scrutinized compared to the claim, and a single answer could mean thousands or even millions of dollars in claims being denied.
Remember that cyber insurance complements your cybersecurity efforts, but it is essential that you do what has been reported to the cyber insurance companies. By combining preventive measures and technology expertise with insurance coverage, you can better protect your organization against cyber threats.
I hope you find this blog post informative! If you have any further questions or need additional details, feel free to visit SKBCyber.com and request a free consultation.
