When searching for the best cyber insurance, it’s important to get as many details about cyber risk and exposures as possible. You need a clear picture of your risks and exposures in order to develop a comprehensive cyber insurance plan – not just one that protects you against being liable for a data breach. Cyber risk is unique for organizations because of all the factors involved. No matter how much a cyber insurer knows about its clients’ plans, the industry is unforgiving when it comes to the cyber risks facing organizations today.
There are many factors that combine together to determine the premium on cyber insurance:
Lack of cyber defenses
This could mean not having good security software, not having enough firewalls, not training employees on security protocols, or having weak password policies. Your premium will reflect this riskiness by being higher than it would have been otherwise.
If you have a history of cyber losses, your insurance company will see that as a risk. They will assume that your business is likely to be affected again, so they increase your premium.
Newer, evolving risk
Hackers are constantly evolving their methods of attack as well as the tools they use to carry out these attacks. They’re also getting better at accessing bigger and more important data, which makes them capable of doing more damage. Because of this, cyber insurance companies have to keep refining how they estimate the risk of an attack on any given industry.
Your industry is considered high risk
A high-risk business is one that is especially susceptible to cyber crimes due to the sensitivity of its data, transactions, and other specific factors. Some of the most high-risk industries are health care, big tech, and finance.
Insufficient or lack of data and analytics
New businesses will have less data and analytics for the insurer to analyze and assess the risk. Therefore, your premiums might be higher to start. However, your premiums may decrease over time as more data becomes available.
Cyber insurance is new to the market
When you buy a cyber insurance policy, you’re helping to create the first generation of cyber insurance pricing. Cyber insurance is brand new and isn’t priced like traditional insurance. The pricing is based on applied actuarial science, which uses statistical analysis to figure out the likelihood of events. If you look at how other industries have handled their coverage, you’ll find that as they gain more information, they are able to adjust their rates accordingly. For instance, auto insurance companies can determine your risk by looking at your driving record—they know how many miles you drive each year and how often you’ve been in an accident. Cyber insurers don’t have this kind of data yet, so they must rely on other forms of risk mitigation such as security audits and incident response plans.
In order to get the best premium for cyber insurance, you need to be completely honest in your assessment of your business and its specific cyber risks. The more accurately you can identify those risks, the better off you and your business will be.
Looking for more information?
A cyber liability policy can help cover your business and keep you updated with industry tips like this one. Get in touch with us today to learn more about cyber liability insurance coverage, or set up a no-obligation consultation with a commercial lines expert through TelaClient.com.