What to Know About Cybersecurity Insurance and Who Needs It

• Cyberattacks’ rising frequency and severity have made cybersecurity insurance an essential tool for businesses to mitigate financial losses.
• Cyber insurance policies often have gaps in coverage, requiring businesses to assess their needs and ensure they have comprehensive protection thoroughly.
• Insurers consider a company’s risk, and ISO 27001 certification can reduce premiums or even be a prerequisite for obtaining coverage.

In recent years, the landscape of cybersecurity has shifted dramatically, with cyberattacks becoming more frequent and severe. This has led to a surge in demand for cybersecurity insurance as businesses seek ways to offset the risks associated with potential cyber incidents. Cyber insurance, once a niche offering, has become a critical component of many organizations’ risk management strategies. However, obtaining and effectively using cyber insurance is more complex than it might seem. While many companies are quick to secure a policy, they often find that their coverage may not fully address their specific needs, leaving them vulnerable to unexpected costs following an attack.

A study by Delinea (who provides access control software and tools) reveals that nearly 80% of organizations with cyber insurance have had to use their policies, often multiple times. Despite this high usage rate, more than half of the respondents reported that their policies failed to cover key expenses such as data recovery, ransomware payments, and incident response. This highlights a significant coverage gap, emphasizing the need for companies to carefully review and understand their policies to ensure they are adequately protected. As insurers tighten their underwriting standards and raise premiums, businesses find it increasingly challenging to secure comprehensive coverage, particularly in high-risk sectors like healthcare and government.

Moreover, while cyber insurance can provide financial relief after a cyberattack, it is not a substitute for strong cybersecurity practices. Insurance policies often require companies to implement specific security measures, such as multi-factor authentication and regular employee training, as a condition of coverage.

As cyber threats become more prevalent and insurance policies more restrictive, companies can benefit from ISO 27001 certification to secure their information systems and potentially lower the costs associated with cyber insurance. Overall, ISO 27001 certification offers both preventive benefits and financial advantages compared to relying solely on cyber insurance.

Read the full article on using cyber insurance

Read this other article on what cyber insurance is and why it is needed