Cyber risk is one of the biggest issues facing businesses today, and it’s not going away anytime soon. As cyber security threats continue to evolve and grow in sophistication, so too must your approach to managing them.
In this post, we’ll take a look at some of the most important takeaways from recent trends in cyber insurance, as well as how you can prepare for digital risk management in 2023.
But first, a quick glance over cyber insurance.
What is Cyber Insurance?
Cyber insurance is a type of insurance that helps protect businesses from the financial risks associated with online business. It's often called cyber liability insurance or cybersecurity insurance.
The goal of cybersecurity insurance is to transfer some of the risks to the insurer. Businesses can purchase cybersecurity insurance for a monthly or quarterly fee, and they get certain protections in exchange. For example, they might get reimbursement for expenses related to a data breach if they can prove that the breach was not their fault.
Businesses can also purchase insurance against specific types of losses, such as those related to ransomware attacks, denial-of-service attacks (DoS), or website defacement/hacking incidents.
How Will Cyber Insurance Evolve in 2023?
The cyber insurance industry is expected to see some interesting changes in 2023. Some of these trends are already underway and others will accelerate soon.
1. Cyber insurance is still new.
The cyber insurance industry is still in its infancy, and many changes are yet to happen. Many of the current trends will evolve and develop over the coming years, whilst some completely new trends will emerge. The cyber insurance industry is a dynamic one that is constantly evolving, so it’s important to stay up-to-date with developments in order to understand how best to position your company or product in this market.
2. The role of third-party insurers will change.
Third-party insurers are likely to play a more significant role in this market as they take on more responsibilities and provide a wider range of services than previously seen. They will also adopt different business models depending on the type of risk they are insuring, so it’s important that you know who your insurer is and what they provide before signing up for insurance coverage.
3. Cyber insurance will become more accessible.
The cost of cyber insurance will continue falling as more people purchase cyber insurance policies at lower premiums than ever before due to competition between insurers fighting for market share within this growing sector.
4. Stabilization of rates and underwriting disciplines will continue.
The cyber market has seen two trends over the last few years, both of which have had a major impact on underwriters: compound rates have increased and standards have become much stricter. As insurers struggle to deal with the growing range of ransomware threats, both trends have emerged as a response to increasing loss ratios.
The effects of rate changes are beginning to take hold, and loss ratios are flattening out. New entrants are increasing as a result, which will bring competitive pressures on rates. As a result, rates are expected to stay flat or decline over the next 12 months.
5. Regulators will focus more on systemic risk.
In order for the cyber insurance industry to be long-term stable, it must assess catastrophe risks as part of the components of cyber insurance pricing. This means that regulators will increase their attention on systemic cyber risks in 2023.
Proactive Steps To Take To Maintain Cyber Insurance Renewals
When it comes to cyber insurance renewals, here are a few things insurers will want to see from you:
1. Multi-factor authentication
Multi-factor authentication protection on all remote access to your network, including any remote desktop protocol connections, email server, cloud services, and backup data solutions. Ensure that all network administrator accounts and any other user accounts with elevated permissions have multi-factor authentication protection.
2. Endpoint security
Cyber adversaries will target vulnerable endpoints regardless of a company’s size or sector. Don’t make the mistake of thinking your organization is too small to be noticed. Endpoint solutions provide businesses with the tools to identify more threats, enforce compliance and protect company policies, ultimately reducing the cost of potential attacks.
3. Disaster recovery plan
Backup and disaster recovery solutions can provide peace of mind by ensuring that your data is never lost, damaged, or corrupted. In case of a widespread ransomware attack, your network's backups should be tested frequently and ideally be capable of restoring essential functions within 24 hours. All backups must be encrypted, and it is recommended there be at least three backups created and stored separately—ideally, two physically and one on the cloud.
4. Employee awareness training
Empower your employees to be part of your security solution by offering them a Security Awareness Training program. To ensure that your data is secure, train your staff to take daily security measures, such as creating strong passwords and reporting phishing scams immediately.
Research indicates that a great majority of company data breaches are caused by human error. A security awareness training program can help employees understand the value of protecting PII, IP, money, and a company’s brand reputation.
5. Email filtering solution
One of the biggest challenges in fighting cybercrime is the ability to identify malicious code in emails. An email filtering solution helps protect your organization from phishing attempts, zero-day attacks, and other malicious attachments.
The insurance industry is already undergoing an astonishing amount of change. New businesses are emerging, carriers are adapting, and technologies are being developed to cover the loss of physical and tangible assets.
As cyber security threats continue to grow and evolve into a full-blown crisis, the insurance industry will come even closer together to combat these dangers. But we can only solve today's problems if we maintain a mass-adoption mindset and continually innovate to keep up with tomorrow's challenges.
In 2023, we will have many more concrete innovations, propelling the insurance industry into a better place than it ever has before. This will put them in a prime position to meet the challenges of tomorrow with agility, not uncertainty.