Cyber insurance is a relatively new type of insurance, however, the underwriting process to determine premiums is quite different. Factors such as a business’s industry, size, and location all play into how much you will pay for cyber insurance coverage. Unfortunately, since this type of coverage is relatively new, there is no set standard cyber insurance pricing model.
The cost of cyber insurance varies by industry but typically ranges from $100-$500 for smaller risk businesses and upwards of $1,000-$2000+ for high-risk businesses. If you’re a riskier business, you’ll have a higher premium to pay. The industries with the highest cyber insurance premiums are payment processing, eCommerce, banks, investment companies, legal firms, and healthcare.
Why are these industries seen as high-risk?
Payment processing companies store sensitive credit card information online. As such, they face a higher risk of data breaches – breaches that could be extremely costly for them if they lack coverage.
eCommerce companies are at risk of cybercrime because they often store both customer information and proprietary data online. If this data is breached, the company could be on the hook for losses incurred by customers whose identities have been stolen or hacked.
Banks and investment firms are seen as risky because they store financial information about their customers online. Their websites are targets for hackers who want to access credit card details or account numbers.
Legal firms deal with confidential documents like contracts or non-disclosure agreements and need to protect them from the prying eyes of competitors and hackers.
Healthcare companies need protection for their patients’ sensitive medical data. Breaches in healthcare data often happen due to third parties like contractors or vendors who access the company’s network and don’t follow security protocols properly.
What risk factors impact the cost of cyber insurance?
There are a few risk factors that impact the cost of cyber insurance for your business. These risk factors are how quickly your business is growing if you already have risk prevention policies in place, the ongoing sophistication of cybercriminals, and geographic or commercial boundaries through API connections that vendors and third parties may have access to.
Companies that are growing quickly will be seen as riskier than more established businesses. This is because rapid growth typically means there are fewer internal controls in place to prevent data breaches from occurring, and hackers can take advantage of these businesses’ growth strategies by targeting their vendor networks.
Businesses that already have data security policies in place are less likely to be hacked. So when you’re looking at cyber insurance costs, know that businesses with security policies in place may have lower premiums than those without them. This is because these companies can prove they take a proactive approach to preventing data breaches and understand the risks they face.
The ongoing sophistication of cybercriminals also affects how much your cyber insurance costs. Hackers are getting more creative and sophisticated with their techniques over time.
Your connections with vendors and third parties may play a significant role. What systems do third parties, vendors, or contractors have access to? What are the limitations of their access to this data? Your policies should outline these specifics so that all parties understand their responsibilities to keep data secure.
Cyber insurance will ultimately come down to a few things: your industry, the size of your company, and your risk tolerance. The cost of cyber insurance may be uncertain to start, but it’s certainly a good idea to protect your business by purchasing a policy. The cost of such a policy will be worth it if you can protect your company’s reputation, save on reputational expenses like litigation costs, and make up for any that you may suffer as a result of a data breach. If anything, the chances of being hit by a large data breach are only increasing with the rise of cybercrime and its prevalence in today’s digital world. The best way to combat cyber risk is to be proactive about your cyber insurance coverage.
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.