In 2022, the FBI’s Internet Crime Complaint Center (IC3) received 800, 944 reported cybersecurity complaints, with losses exceeding $10.3 billion. With the rapid evolution of cyber-attacks, leaving businesses uninsured poses operational and financial threats. In contrast, subscribing to a cyber insurance policy allows businesses to mitigate the financial burden of cyber-attacks. For example, if your business is uninsured and requires cyber insurance after a data breach, you might incur extra financial obligations or struggle to get comprehensive insurance coverage.
This article explores some of the challenges encountered by uninsured businesses seeking coverage after a data breach and how to overcome them.
What challenges do uninsured clients encounter when renewing insurance after a cyber breach? Let’s explore some of these challenges and how to overcome them:
Financial Challenges
According to an IBM cost of data breach report, the global average total cost of a data breach is about $4.35 million. Without cybersecurity insurance, you will face financial strain, including legal fees, customer compensation, and system recovery. In addition to the devastating effects of cyberattacks, securing insurance coverage after a cyberattack is more expensive than implementing it before a breach. Insurance brokers may charge a higher premium due to perceived higher risk. With resources already strained, allocating funds for higher insurance premiums may prove difficult for your business in safeguarding against future cyber threats.
Navigating the Search for Affordable Coverage
Insurance companies assess the risk profile of a business when determining coverage options and pricing. Businesses without a history of attacks, and who have taken preventive measures will be classified as lower risk. When you experience a data breach, your systems become vulnerable, placing you in the higher-risk quadrant. Insurance companies premiums make it difficult to access comprehensive coverage. With limited options, you may have to compromise on certain coverage aspects, leaving the business vulnerable to cyberattack losses that a more comprehensive policy would cover.
Risk of Being Denied Coverage
Businesses with a history of cyber breaches are often profiled as higher risk, making securing coverage for future incidents challenging. The absence of prior coverage can suggest increased vulnerability, although it does not necessarily correlate with inadequate cybersecurity practices. Insurance companies will consider your security risk profile and the costs of expenses from previous incidents before providing coverage. These costs, which may cover incident response, data breach notification, forensic investigations, legal actions, and reputational damage, increase the overall risk profile of the business. This could raise the probability of your renewal requests being denied.
Deciphering Complex Insurance Terms
Companies without prior cyber insurance might find it challenging to interpret technical policy terms during renewal, potentially overlooking key coverage aspects. This lack of understanding could lead them to select a plan that does not adequately address their unique cybersecurity needs. Therefore, thoroughly comprehending policy terms is crucial to ensure optimal protection against future cyber threats.
Grasping the Scope of Cyber Risk
The rapid evolution of cyber risks, such as new attack vectors, data breaches, ransomware, and regulatory compliance, can be overwhelming to uninsured clients. This lack of understanding can hinder ones ability to assess their insurance needs and select the appropriate coverage effectively. As a result, uninsured businesses seeking a cyber insurance policy might neglect other areas and focus on the cause of previous data breaches rather than invest in a thorough risk assessment. Ignoring other risk-prone areas exposes your business to severe revenue losses in cases of a future cyberattack.
How Can Uninsured Clients Overcome the Challenges of Post-Breach Insurance Applications?
If your business is uninsured, here are some steps to overcome cyber insurance applications challenges.
Conduct a Cyber Risk Assessment
Following a breach and the conclusion of the investigation, it is important to conduct a comprehensive cyber risk assessment to identify other potential cybersecurity risks and vulnerabilities. This assessment will help you understand the types of insurance coverage and the cybersecurity measures you should adopt.
Seek Professional Consultation
Consult with cybersecurity and insurance professionals to navigate the application process successfully. They can provide valuable insights to help you navigate the complex insurance landscape and suggest suitable coverage options tailored to your business needs.
Review Insurance Providers
Compare multiple insurance providers to find the best fit for your organization. Consider your business risk profile, cybersecurity budget, and the insurance company’s experience with handling cases from your industry. In addition, compare their coverage options, pricing, policy terms, and the insurer’s reputation in handling cyber claims. You should only work with partners that tick all the right boxes and offer comprehensive coverage.
Evaluate Policy Document
Review policy documents, including terms and conditions, coverage limits, deductibles, and exclusions. This will help you understand the policy and identify exclusion and potential consequences. You should seek clarification from the insurer on any unclear aspects and ensure that your coverage adequately addresses your business needs.
Collaborate with a Trusted Cybersecurity Firm
Partner with a professional cybersecurity firm like CyberClan to implement robust cybersecurity measures within your organization. A cybersecurity plan will help minimize risks, prepare you in the event of a breach, and demonstrate a commitment to cyber resilience. This can include regular employee training, strong access controls, advanced threat detection systems, and incident response plans. Subsequently, you might enjoy lower cyber risk profiling and help you get fast approval for your renewal requests.
At CyberClan, We help organizations build a more robust, advanced, and comprehensive cybersecurity strategy through our proactive risk management services. Our methodology identifies cybersecurity risks and vulnerabilities, builds secure architecture, and strengthens existing systems. We deploy services like Phishing Simulation Programs, Tabletop Exercises, Incident Response Plans, and Policy Development to help you protect your systems and avoid litigation from data breaches. Contact us to implement a robust and secure security infrastructure for your business and lower your risk profile.
