More businesses of all sizes are considering cyber liability insurance. As you serve your clients, you may often be asked, “What will cyber liability insurance cost?”
Businesses’ budgetary concerns are understandable and important. They should be asking how much it would cost them to try to survive the legal costs, regulatory fines, recovery costs, and other expenses a data breach brings without proper coverage.
At ProWriters, we have resources you can use to help your clients understand the real cost of a data breach.
We can help you make them appreciate why preparing for a potentially expensive cyber incident is a must—and why a cyber policy matters even if they already feel prepared.
And we can equip you to answer their question about the cost of cyber insurance and show them why it’s a smart investment. It could even save their business.
The Daunting Cost of Data Breaches for Businesses
Globally, the average cost of a data breach is $3.92 million. But the damage any particular company sustains may vary significantly, depending on the size of the organization and the nature of the breach.
Don’t let your clients who are small business owners assume large companies are the most likely targets of data breaches and other cyber threats. Forty-three percent of cyberattacks are aimed at small businesses—and only 14% of those businesses are capable of defending themselves.
Small and medium-sized businesses (SMBs) are frequent targets because cybercriminals view them as less prepared and therefore more vulnerable. They’re not wrong. In a 2019 survey of decision-makers at SMBs, 18% listed cybersecurity as their lowest priority. Although 66% surveyed said they believe a cyberattack is unlikely, statistics show cyberattacks affected 67% of SMBs that year!
Data breaches now cost companies more than ever before. Remember, hackers don’t have a maximum limit to how much they can cost your business. The average cost of a cyber incident for SMBs was $108,000, according to the 2019 Kaspersky Global Corporate IT Security Risks Survey. The study breaks down the costs of an incident by category:
- Third-party IT infrastructure incidents—$162,000
- Cryptomining incidents—$115,000
- DDoS attacks—$138,000
- Electronic leakage from internal sources—$119,000
- Malware infection of company-owned devices—$117,000
- Inappropriate IT resource use by employees—$116,000
In addition to the immediate costs of a breach, businesses would also have to pay to hire IT forensic experts to investigate what data criminals exposed and accessed, and how.
These expenses continue to add up for years after an incident. They can reach an amount far greater than what cyber liability insurance costs. And companies without adequate cyber insurance—or without any coverage at all—must pay them out of pocket.
For large businesses, the costs of a cyber incident are even higher. Businesses with more than 1,000 employees are defined as enterprises in the Kaspersky Lab survey, which found malware infection of company-owned devices costs a whopping $2.73 million per incident.
Other major expenses per type of incident include:
- Third-party device incidents—$2.57 million
- Physical loss of company-owned mobile devices—$1.69 million
- Cryptomining attacks—$1.62 million
- Ransomware attacks—$1.46 million
- Physical loss of bring-your-own devices—$1.41 million
Third-party coverage for exposure is a particular problem for both SMBs and enterprises. Transferring services to a third party doesn’t transfer liability. Companies without cyber insurance pay the price when one of their vendors is attacked.
What Type of Business Needs to Buy Cyber Insurance?
Any business using technology is vulnerable to a cyberattack.
Any one of these activities could leave you open to a hack:
- Accepting payments online or though in-store credit card transactions
- Communicating with customers online or over VoIP (Voice over Internet Protocol) phone
- Transferring documents electronically
- Storing personal information electronically
Even your business clients that don’t store sensitive information could suffer a cyberattack like ransomware or social engineering—especially SMBs.
Greedy cybercriminals will use such social engineering tactics as phishing emails to introduce ransomware into a business’s network. These attacks have become increasingly sophisticated. Even an employee trained in best practices can mistake a fraudulent email for a legitimate one, or click a link by accident. Mistakes like these give bad actors all the opportunity they need to take a computer network hostage, then demand payment in exchange for access to vital company records.
The average ransomware payment in the U.S. surpassed $500,000 in 2021. Many companies, believing they have no other choice, will pay. The payment itself is a big hit, but revenue lost from business interruption can also be devastating.
Some 66% of organizations reported “significant loss” after a ransomware attack, according to Cybereason. Cyber insurance policies can cover both ransomware payments and the lost revenue they cause.
What Strong Cyber Liability Insurance Provides
Cyber insurance covers more today than it ever has. Competitive policies include not only incident response planning but also preventive measures so businesses can take a proactive posture against cyber threats.
In the end, then, what does cyber liability insurance cost? Less than businesses can expect to pay if they don’t have it, or if they don’t have it in an adequate amount.
Data breaches’ immediate costs are significant. Their long-tail costs often prove disastrous. An insurance premium is a small price to pay for a dedicated policy that comes with a panel of experts ready to help your client the moment an incident occurs.
But cyber liability coverage gives your business clients mitigation measures, as well as the coverage you need to access the services of top cyber experts.
Because cyber attacks are on the rise, so are cyber coverage claims. And because claims are up, insurance premiums are going up, too.
But when you’re a registered ProWriters broker, you can use our innovative Cyber IQ Comparative Rate Platform. You’ll instantly get side-by-side, competitive quotes for strong cyber policies from the top insurance companies providing this coverage.
In addition to the policy features we’ve discussed here, policies you can help your clients access through ProWriters cover:
- IT forensic costs
- Notification costs
- Credit monitoring and protection costs
- Regulatory fines
- Fines and penalties
Interested in giving your clients an informed answer even sooner to the question of what cyber liability insurance will cost?
Have them fill out this form or fill it out with them. We’ll give you an estimate of what they can expect to spend for the cyber liability coverage they need.