Is Cyber Insurance Worth It?

Are you considering whether cyber insurance is worth it for your organization? It could be. With the rise in ransomware, DDoS attacks and data breaches, cyber insurance is being used as a way for companies to protect themselves as they realize risks in their business.

However, many insurers are now excluding ransomware¹ and state-backed attacks² from their coverage. So, how can you determine whether cyber insurance is worth it?

When Is Cyber Insurance Worth It?

When considering whether to purchase cyber insurance, you should perform a cost-benefit analysis against your net risk exposure. The objective is to understand how much cybersecurity risk your business is exposed to and the impact it has on your organization and its future initiatives.

Additionally, insurer CyberInsure One ³ suggests that you ask yourself the following questions:

• Have you been attacked before?
• Have your competitors been attacked?
• Do you handle sensitive data, such as PII or ePHI?
• Are you dependent on IT?
• Do you work with third parties?
• Can you pay for a recovery?

And just what are the costs of a data breach? According to IBM’s Data Breach Report⁴, the average global cost of a data breach is $4.35M, and the average cost of a data breach in the United States is $9.44M. These sudden and unplanned costs could send many companies into a financial tailspin, bankruptcy or potentially forced out of business.

If your net exposure is high and the cost of cyber insurance is lower than recovery costs, then your organization would benefit from cyber insurance.

What Does Cyber Insurance Cover?

The types of cyber insurance policies and coverage may vary widely depending on the insurer and the specific categories of data and services within your organization’s network. The most common cyber risks are privacy, security, operational and service related.

Generally, cyber insurance is designed to protect these primary areas through four distinct insurance agreements⁵:

• Network security and privacy liability
• Network business interruption
• Media liability
• Errors and omission

Beyond these basic agreements, there are numerous coverage additions that provide more comprehensive and nuanced coverage — including social engineering, reputational harm and equipment replacement. A one-size-fits-all policy is rarely the best fit for most companies, so you’ll need to evaluate the policy options and limits with a well-brokered cyber insurance carrier.

Why Are Cyber Insurance Costs Rising?

Cyber insurance costs are rising, indicates Veeam’s 2023 Global Ransomware Trends Report:⁶

• 74% of respondents saw increased premiums
• 43% saw increased deductibles
• 10% saw coverage benefits reduced

Why do cyber insurance costs continue to rise?

The increasing frequency and severity of cybersecurity incidents have led to lower coverage limits and increasing premiums. The majority of these incidents have been ransomware attacks. In fact, the same Veeam report revealed that one in seven organizations will see almost all (>80%) of data affected as a result of a ransomware attack.

How ZenGRC Can Help You Prevent Cyberattacks

Cyber insurance can be a worthwhile option, but it can’t be your entire strategy. Your best approach is to build strong defenses against attacks regardless of whether you’re insured for them.

Staying on top of threats actively versus being reactive can be challenging no matter the size of your company, and increasing scale often decreases transparency into your risks. So, how can you make sure that all threats are accounted for?

The ZenGRC is a risk and compliance solution that makes tracking and analyzing threats throughout your company more straightforward than ever before. ZenGRC provides a clear view of your company’s threat landscape and includes automation and integration to help prevent cyber threats before they strike.

Schedule a demo and learn more about how ZenGRC can help you build a solid first line of defense for your company’s data.

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Resources:

• ¹ Ransomware is being excluded from cyber insurance policies
• ² Cyber Insurance Market in Turmoil Over State-Backed Attacks
• ³ Is cybersecurity insurance really worth it?
• ⁴ Cost of a Data Breach 2022 – IBM Report
• ⁵ Cyber 101: Understand the Basics of Cyber Liability Insurance
• ⁶ 2023 Ransomware Trends Report – Veeam