How Does Cyber Insurance Work and Where to Start?

With cyberattacks on the rise, organizations are at greater risk of ransomware attacks. Cybercrime damages are predicted to reach $6 trillion worldwide this year. These costs include the damage and destruction of data, operational downtime, lost productivity, intellectual property theft, recovery of data and systems, and potential legal repercussions. Many organizations are looking to purchase cyber insurance to help mitigate the risks of ransomware but are asking how does cyber insurance work and where to start the process?

Short on time? Scroll to the bottom for the cliff notes.

These organizations are asking the right questions because operating without cyber insurance leaves organizations open to monetary and operational risks. With ransomware demands increasing in size and frequency, the cyber insurance market is rapidly adjusting, resulting in higher premiums and coverage reductions, scrutiny of risk profiles, and detailed assessments of an organization’s cybersecurity posture.

Cybersecurity insurance requirements are becoming more stringent – existing policyholders are being hit with complicated cybersecurity questionnaires to keep their current policies, and underwriters won’t extend coverage or restrict amounts if minimum basic controls aren’t in place. Adding even more pressure, many face the possibility of losing existing or prospective clients if their cybersecurity posture is not up to snuff and they cannot receive cyber insurance. You are not alone if you are unsure where to start or how your organization can protect itself with cybersecurity controls that meet cyber insurance needs.

Want to know simple approaches to help policy holders lower their coverage costs? Watch The Perfect Storm for Cyber Insurance: How Did It Get So Complicated?

How Does Cyber Insurance Work?

It Starts with an Assessment

Start with a cybersecurity risk assessment to determine your organization’s current cybersecurity posture. The widely accepted National Institute of Standards and Technology (NIST) and Center for Internet Security (CIS) frameworks can serve as a guide to meet the basic controls that most cyber insurance providers might require. Risk assessments help to expose any holes in current cybersecurity postures and identify room for improvement. Using this information, you can form a holistic plan to bolster your cybersecurity, including assessments and testing, policies and training, and detection and response.

Identify and Define

Next, figure out the coverage your organization needs. Not all cyber insurance plans are created equal, and organizations need to understand each aspect of their coverage to ensure it matches their organization’s needs. This can include conducting scenario exercises with your cybersecurity provider to run through common attacks based on the areas identified in your cybersecurity risk assessment that require improvement.

Organizations also need to understand the difference between first-party vs. third-party cyber insurance or liability coverage to protect their organization and customers. First-party coverage covers direct losses to the insured, while third-party coverage covers losses suffered by others based on their relationship with the insured.

Embrace Continuous Comprehensive Cybersecurity

After assessing your cybersecurity program and choosing coverage that works for your company, it’s essential to work to keep your organization protected from cyber threats continuously. Comprehensive cybersecurity is not a project you can just set and forget; insurance providers often require continuous protection. Further, cyber insurance coverage is not a substitution for a comprehensive cybersecurity program. While insurance may reimburse costs, it can’t mitigate reputational damage after a breach or incident, nor will it reinstate trust from affected customers.

Defendify’s Risk Assessments are constantly updated and mapped to NIST and CIS frameworks. With a comprehensive risk assessment and actionable recommendations for improving posture, we help clients adequately set themselves up for success when obtaining cyber insurance coverage.

TL;DR

• Many organizations are looking to purchase cyber insurance to help mitigate the risks of ransomware.
• Cybersecurity insurance requirements are becoming more stringent – existing policyholders are being hit with complicated cybersecurity questionnaires to keep their current policies.
• Not all cyber insurance plans are created equal, so it’s critical to find out the current state of your organization’s cybersecurity and what coverage it needs.
• Insurance providers often require continuous cybersecurity protection.