We’ve been getting this question a lot lately, so I wanted to take some time to explain this situation to frustrated and confused business owners.
The issue? Business insurance providers have been starting to ask questions about cybersecurity when it comes time to renew business insurance policies.
In this Q&A, we'll explore why insurance providers are focusing on cybersecurity and how it affects your business insurance. Hopefully this will help guide you in the right direction so you can continue to remain in coverage and avoid higher premiums.
The Link Between Business Insurance and Cybersecurity
Business insurance and cybersecurity are more connected than you might think. It's all about risk management.
Insurance providers are in the business of assessing and covering risks. In the digital age, cyberthreats have become a significant risk factor.
That's why insurance providers are keen on understanding your cybersecurity measures. They want to gauge the level of cyber risk your business is exposed to.
In essence, your cybersecurity practices can influence your business insurance terms and conditions.
How Cyberthreats Affect Your Business and Insurance
Cyberthreats can have a huge impact on your business. They can disrupt operations, damage your reputation, and lead to financial losses.
These potential losses are what your business insurance is designed to cover. But the extent of coverage can vary based on your cybersecurity measures.
If your business is vulnerable to cyberthreats, your insurance provider might see it as a high-risk client. This could lead to higher premiums or even denial of coverage.
On the other hand, strong cybersecurity measures can lower your risk profile, potentially reducing your insurance costs.
What Kinds of Cybersecurity Precautions Does My Insurance Company Want to See?
While it’s going to vary between providers and coverage options, the list of questions a business insurance provider might ask covers a very general range of cybersecurity solutions. They typically include:
- Strong password policies
- Multi-factor authentication
- Email filtering and spam protection
- The overall security of your website
- Web security and firewalls
- Secured, encrypted data backups
- Endpoint detection and response (EDR)
- Vulnerability management
- Security awareness training and testing
Keep in mind that your insurance rep probably isn’t well-versed in cybersecurity, and might not be able to answer follow-up questions or help guide you through ensuring that your business meets their qualifications.
In fact, we’ve had a few conversations with clients who have had this type of interaction with their business insurance provider, and they were left with the impression that all these questions related to their company website.
This wasn’t the case (although your website security is important, too). The point is that your insurance company probably isn’t focused on your website’s security, but your overall, all-encompassing cybersecurity across your network.
Ultimately, your insurance provider wants to make sure you are actively doing your part to prevent several potential security risks. These risks include:
- Data breaches
- Ransomware attacks
- Phishing scams
- Denial of service attacks
- Malware infections
The Consequences of Inadequate Cybersecurity on Insurance Claims
If your cybersecurity is lacking, it can hurt you. Especially when it comes to insurance claims.
In the event of a data breach, your claim might be denied if your security measures were found to be insufficient. Investing in cybersecurity is not just about preventing attacks. It's also about ensuring your insurance coverage when you need it most.
Your rates can increase or you could potentially be denied coverage as well.
Final Thoughts: Proactive Cybersecurity Lowers Costs and Risks
In the end, it's clear that cybersecurity matters. Take a step back and ignore the fact that your insurance company is asking for it; ask yourself what’s best for your business.
Poor cybersecurity can affect your business, your employees, and your customers. You aren’t just putting yourself at risk. If you store sensitive information for your customers, you are putting them at risk too.
The average cost of a ransomware attack is a staggering $4.35 million. That doesn’t even include the cost of the average ransomware payment, which is now $812,360. Not only is this type of threat expensive, but it can cause a major disruption to your business that could last weeks or months.
Our recommendation is to confirm with your insurance agent that you have their full comprehensive list of everything they want and recommend.
Then commit to it.
In fact, it’s a good idea to take that list to your trusted IT provider and ask for their opinion. Your insurance company probably isn’t being as comprehensive as a security-focused entity. Each one of those line items doesn’t represent a cost in most cases. Sure, it can take time and money to bring your business up to compliance, but a big part of cybersecurity is about policy and understanding. It’s less about throwing a ton of money at the problem and more about making smart changes that keep the threats out.
Let’s Get Your Cybersecurity In Check
We’re used to helping businesses meet demanding cybersecurity compliance requirements, so we can help your organization review your insurance requirements and then implement everything they want from you. Trust us; it’s better for your organization to have these taken care of.
Let’s start by discussing your needs. Give us a call at (410) 531-6727 to get started.
