Cybersecurity insurance is quickly becoming an invaluable safety net for businesses of all sizes. As demand for cybersecurity insurance increases, providers are tightening requirements. It’s a business protection that was once thought of as a safeguard only necessary for corporate and personal data, is becoming a non-negotiable line item for businesses of any size.
In today’s market, an unexpected cybercrime event can lead to significant business disruption and unforeseen costs. According to a report by the Ponemon Institute, the average cost of a cyber attack on a small or medium-sized business is around $200,000.
Meanwhile, in 2020, there was a staggering 141% jump in data breach activity as remote and hybrid work proliferated. To date, cyberattacks targeting critical business infrastructures, healthcare networks, and even big tech firms pose a threat to organizations around the world. Consequently, companies in every industry have been sourcing cybersecurity insurance at an accelerated pace.
The total cybersecurity insurance market is projected to grow by 250% in the next five years—from $8 billion in 2020 to $20 billion by 2025 due to increasing demand. In 2023, insurers are expected to continue leveling up their requirements as their underwriting processes become more sophisticated.
What is cybersecurity insurance?
Cyber insurance helps protect businesses from losses that result from cyber attacks, data breaches, and other cyber-related incidents. According to the Risk Placement Services (RPS) 2023 U.S. Cyber Market Outlook, the three most common types of attacks across small to mid-sized (SME) insureds are fraudulent payments, social engineering and ransomware attacks.
A typical cyber insurance policy will cover costs associated with cybercrime including data breach investigations, system and website restoration, ransomware payments and remediation, income loss for business interruption, expenses and income loss and more.
Businesses who want to protect themselves will need to fortify existing IT infrastructures. Insurance companies base rates on a company’s revenues and the type of business a company is in. Companies are segmented into different premium tiers and insurance carriers will consider third-party information and data records to assess risk. As cybersecurity insurance premiums increase, companies are taking a closer look at coverage options and insurance provider requirements.
Key cybersecurity insurance requirements:
There are two requirements that reputable cybersecurity insurance providers call for: Two-Factor Authentication (2FA) and Advanced Endpoint Detection & Response (EDR).
Two-factor authentication (2FA) is a security process in which a user is required to provide two different authentication factors in order to access their account. Factors typically include something the user knows, like a password, something the user has, like a smartphone, and something the user is, like a fingerprint. Requiring two-factor authentication makes it much more difficult for unauthorized users to access accounts.
Advanced endpoint detection and response (AEDR) is a security technology that uses artificial intelligence (AI) and machine learning to detect and respond to potential cyber threats in real time. AEDR systems will monitor activity on a network and its connected devices, known as endpoints, using advanced algorithms to flag potential threats. If a threat is detected, the AEDR system is capable of taking pre-defined actions to mitigate the threat.
Both of these security measures are critical cybersecurity insurance requirements and key components to a successful cybersecurity strategy.
Learn more about cybersecurity protection available for your business.
Carmichael Consulting is here to help you select, implement and manage cybersecurity protections. We offer a number of cybersecurity options, including multi-factor authentication, advanced endpoint detection and response and support for meeting cybersecurity insurance requirements.