A Guide to Cyber Insurance

Prevent Claim Denial and Ensure You're Protected

How Has Cyber Insurance Changed?

The latest trends in cybersecurity are concerning- ransomware attacks have skyrocketed, cyber threats have become more sophisticated, and an exponentially evolving attack surface has made cybersecurity leaders anxious. But they're not the only ones- since insurers bear much of the cost of damages, they, too, have become increasingly nervous about evolving cyber threats. As the risks continue to grow, insurers have raised premiums and made it difficult for you to make a claim after a data breach.

 

We'll Dive Into

 

The Rising Threat of Ransomware and its Impact on Cyber Insurance

Design Element

It’s undeniable that ransomware is one of the biggest threats to your organization today.

Cybersecurity Ventures predicts that ransomware will cost an annual $265 billion loss by 2031 with a new attack every two seconds as threat actors refine their malware payloads and extortion tactics1.

Double-extortion attacks, in particular, allow ransomware gangs to maximize damage and increase ransom payout from organizations. In the first extortion, hackers encrypt the victim’s data and copy it onto their servers, forcing victims to pay to release that data. The cyber cartel then keeps the copied data for future extortions2.

 

Cyber Insurance Guide_ Part 1

 

The Cost of a Ransomware Attack

 

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$170,404

Average ransom paid by a mid sized organization3

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22 Days

Average length of business downtime after a ransomware attack4

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11%

Average % of ransoms paid by a mid sized organization3

Cyber Insurance Guide_ Ransomware Cost

 

Rising Insurance Premiums and the High Cost of Claim Denial

Red Line (1)

As damages from ransomware grow exponentially, insurance companies grow more fearful. Ransoms, business interruption
losses, legal fines, and damage mitigation can cost millions— and insurers are no longer willing to bear the costs.

Insurers are now scrutinizing their cyber policies for new customers and renewals to include more stringent limits and restrict policy terms with additional exclusions to account for increased risk6. 

Insurers who previously issued $5 million cyber liability policies in 2020 have reduced their limits to between $1 million and $3
million in 20217. Insurers are also increasingly discerning with their payouts—some are asking policy holders to pay half of the ransom amount, while others are refusing to pay at all.

Denied Insurance Claims: What Could They Cost Your Organization?

With insurance companies limiting payouts and making it difficult to file a claim, organizations
are quickly realizing they are not as financially protected as they thought.

Insurance policies require specific contractual terms and conditions be met; failure to comply can be grounds to deny or significantly reduce claim payments. After an attack, insurers typically hire costly forensic experts to verify the claim amount and investigate the cause of the breach.

If investigators discover that the data breach was caused by a lapse in your security, not only will insurers deny the claim, but you may be asked to bear the costs of these experts’ services.

Recent reports estimate that the legal claim for a large company following a breach average to $1.7 million8. However, if the insurance claim is denied, your organization could suffer additional costs from an expensive and lengthy legal battle with the insurer.

If a ransomware attack leads to the successful exfiltration of your organization's sensitive data, lawsuits won’t be your only concern. You’ll also face heavy fines from failure to meet data compliance standards such as GDPR (General Data Protection Regulation), HIPAA (Health Insurance Portability and Accountability Act), and CCPA (California Consumer Privacy Act).

5 Ways to Improve Your Cybersecurity Posture and Ensure a Successful Claim

Red Line (1)

The impact of ransomware on cyber insurance is not just expensive. It’s devastating.

In a rapidly evolving threat environment, achieving compliance alone is not enough; it doesn’t guarantee protection from ransomware, nor can it ensure a smooth process when submitting a claim.

The Digital Hands Security Operations Center (SOC) provides coverage when you need it most with the resources to monitor, analyze, and defend your network against any kind of cyber attack- proactively keeping you ahead of ransomware, and providing a clear path for cyber insurance coverage.

Cyber Insurance Guide_ Part 3

 

See More. Flex More. Do More.

Here are five solutions to minimize your organization’s cyber risk exposure and ensure you’ve maintained adequate security standards.

Endpoint Detection Response

Endpoint Detection Response

Next-Gen SIEM

CyGuard Next Gen SIEM

Vulnerability Management

Vulnerability Management

SOC-as-a-Service

SOC-as-a-Service

Cloud Collaboration and Email Security

CyGuard Cloud Collaboration and Email Security

Prevent Claim Denial and Ensure You're Protected

 

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1  Global Ransomware Damage Costs Predicted To Exceed $265 Billion By 2031; Cybersecurity Ventures
2  Enterprise Ransomware: Assessing the future threat and what it means for (re)insurers; CyberCube
3  The State of Ransomware; Sophos
4  Average duration of downtime after a ransomware attack from 1st quarter 2020 to 3rd quarter 2021; Statista
5  2022: Can companies mitigate increasing cyber risks?; TechWire
6  Cyber Insurance: Insurers and Policyholders Face Challenges in an Evolving Market; U.S. Government Accountability Office (GAO)
7  U.S. Cyber Market Outlook
8  Cyber Claims Study 2021 Report; NetDiligence