Cost of Cyber Insurance

 

Cyber insurance is an essential safety net most small and mid-sized businesses should consider getting. For a small monthly fee, starting from as little as a hundred dollars or so, you can reduce (or eliminate) your liability in the event your business is breached.

And given that a security breach can cost even small and mid-sized businesses (SMB) as much as $650,000, your cyber insurance policy can be invaluable. In this article, we’ll take a closer look at cyber insurance costs and how you can find the best possible cyber insurance policy for your business.

“In the digital age, investing in cyber insurance isn’t just about managing costs, it’s about safeguarding your businesses’ very future. A small premium today can shield you from the devastating costs of tomorrow,” says Michael Kourkoulakos, CEO of NENS

 

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The Average Cyber Security Insurance Cost is Rising

You may be wondering, “What does cyber insurance cost?” In June, Bloomberg reported that cyber insurance premiums surged by 50% as a result of an increase in ransomware attacks. Although the rate of increase has slowed, the year-on-year increase in cyber insurance average cost was up by 11% in Q1 2023, reports the Wall Street Journal.

The reason for the higher premiums comes down to risk management. Insurance companies can only survive if their claims remain lower than their premiums. A company with inadequate cybersecurity measures in place (and therefore more likely to get breached) exposes insurers to much greater financial risk

This puts small and mid-sized businesses at a disadvantage. SMBs have smaller budgets to invest in comprehensive cyber security measures, thereby raising their risk profile and, therefore, their cyber insurance cost.

Cost of Cyber Insurance

Source: Reinsurance News

 

How Much Does Cyber Liability Insurance Cost?

How much you will pay for your cyber liability coverage depends on a variety of factors. Some of these are:

  • Your coverage limits and deductibles
  • The industry you operate in
  • Digital risks your business faces
  • Type of liability coverage required
  • Amount of confidential data managed
  • Employee count
  • Record of insurance claims
  • Industry-specific risks

Like the insurance you have for your vehicle, any optional coverage you opt for will also increase the premium you have to pay every month. For instance, if you go with a lower deductible (how much your business pays in the event of a cyber attack), your premiums will increase.

It’s estimated that small businesses pay around $1,740 per year for $1 million of coverage.

Insurance rates can vary enormously from business to business and from provider to provider, which is why you should shop around to find the most competitive rates. If you are unsure of how much coverage to opt for and the type of liability coverage you should get, our team will be happy to guide you.

Does Your Business Need Cyber Insurance?

Deciding whether you need cyber insurance follows the same process as determining whether you need insurance for any other type of risk. The main question to ask yourself is, “Are the costs of being breached potentially worse than the cost of cyber insurance?”

The ease and efficiency of perpetrating a cyberattack means, today, neither small nor large businesses are off-limits for cybercriminals. Virtually every business maintains data digitally and relies on essential applications for its operations. That means there are valuable digital assets cybercriminals can target.

For instance, small and mid-sized businesses are three times more likely to be targeted by ransomware precisely because they are easier targets. And the tactic works too–73% of SMBs pay the ransom.

What’s more, no organization is completely immune from attacks. Ones such as social engineering attacks can be particularly difficult to defend against (as this Canadian furniture retailer discovered).

When a business is breached, the revenue loss, legal costs, reputational damage, and remediation costs can be significant. No wonder 60% of small businesses shutter 6 months after being hacked, says Cybercrime Magazine.

While no one can guarantee that your company’s network won’t be breached, every business should take measures to:

  1. Effectively reduce the likelihood of a successful attack as much as possible.
  2. Have a cushion to fall on, such as cyber insurance, if an attack is nonetheless successful.

 

How a Managed Security Service Provider Can Help

A security-focused MSP can potentially help with cyber insurance costs in two primary ways:

  1. Helping you to reduce your risk profile increases your chances of obtaining a better insurance quote.
  2. Directly connecting you with cyber insurance companies they’ve formed partnerships with.

Insurance companies recognize the challenges facing small businesses when it comes to cyber security. In-house cyber security rarely provides enough confidence for insurance companies to consider the company low-risk.

Cyber threats have simply grown too sophisticated for businesses of any size to manage them all effectively in-house, but especially not small businesses. These companies simply lack the resources.

Insurance companies recognize a security-focused MSP’s experience and expertise and are, therefore, far more likely to determine a far lower cyber security insurance cost for your company.

In some cases, MSPs also have partnerships in place with cyber insurance writers and can help facilitate a better cyber insurance coverage cost that way.

Interested in learning more about cybersecurity? Check out these blogs:

 

Still Wondering About Cyber Insurance Costs? Here’s How NENS Can Help

NENS exceeds best-practice cybersecurity standards so that our clients have peace of mind and confidence that their business is protected and secured. We can also advise you about cyber liability coverage and how to obtain a policy from an insurance company.

We implement minimum security standards for all clients with layers of security, including:

  • Next-generation AI and machine learning EDR (Endpoint Detection and Response) antivirus software with 24/7 monitoring.
  • Cyber Security Awareness training for employees
  • Single sign-on multi-factor authentication
  • Automated patching and updates
  • Email security and spam filtering

To keep ourselves current, we have a technology committee that reviews emerging trends and solutions, and we require all our clients to perform an annual security risk assessment.

Contact us today to learn more about how NENS can help your company in Boston with its cyber risk insurance cost and overall security posture.

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