As cyber attacks grow in frequency and complexity, more businesses are asking, “Is Cyber Insurance worth it?”
The short answer—“Yes!”
Consider this: Ransomware-related data breaches doubled in both 2020 and 2021, yielding a record number of data compromises.
Compromised data can cost companies dearly. The ransoms, lost business, system restorations, and third party notification expenses (among others costs) associated with such incidents add up. Without data breach insurance, businesses often find themselves ‘on the hook’ for more than they can afford.
When your business clients ask you about purchasing cyber security insurance coverage, you owe them more than the short answer. You need to help them understand how much a data breach really costs, who it’s most likely to affect, and what help cyber attack insurance provides.
Who Needs Cyber Security Insurance in Today’s Marketplace?
Any business using the internet or computers—big, small, or in-between—can benefit from cyber attack insurance. A business is vulnerable to cyberattacks whenever it:
- Accepts payments online.
- Accepts in-store credit card transactions.
- Communicates with customers online or via voice over internet protocol (VoIP).
- Stores personal information electronically.
- Transfers documents electronically.
- Would be harmed from ransomware and a business interruption event
While virtually all modern enterprises are at risk, understanding what data breaches can cost small and medium-sized businesses (SMBs) is particularly important.
Cyber criminals often prefer to target SMBs. They think SMBs are less prepared and more vulnerable.
They’re usually right.
A majority of small business owners (56%) are “unconcerned” about cyberattacks, the CNBC | Momentive Q3 Small Business Survey found. A scant 28% have cyber incident response plans in place. Yet 55% of SMBs have experienced a cyberattack, per a 2020 report from automation company ConnectWise.
Transnational cybersecurity corporation Kaspersky Lab breaks down the cost of cyber incidents to SMBs. Viruses and malware cost an average of $68,000. Targeted attacks cost $188,000. Some other cyber incidents and their latent cost to SMBs include:
- Loss of devices containing sensitive data—$83,000
- Misuse of IT resources by employees—$79,000
- Loss of business—$21,000
- Hiring of external cyber experts—$21,000
Third party exposure presents a particular problem for businesses. Transferring services to a third party doesn’t transfer liability. Companies without cyber security insurance coverage often pay the price when one of their vendors is attacked.
Even businesses not handling sensitive information remain at risk. Cyber criminals often don’t care what kind of information a company has, especially when they target SMBs. Motivated by financial gain, hackers can hold a network hostage or demand payment in exchange for restored access to vital company records, no matter the kind of data involved.
A ransom payment can be significant, but so are the lost revenue and other costs associated with a data breach. The costs of dealing with a cyber attack can keep mounting long after the incident occurs. Companies without data breach insurance must pay all these expenses out of pocket.
The Six-Step Guide to Becoming Your Clients’ Cyber Expert
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How Cyber Security Insurance Coverage Can Help
What cyber liability insurance costs is a small price to pay for coverage that comes with experts ready to help the moment a data breach or other cyber attack happens.
Cyber Insurance goes a long way toward ensuring a business can survive the financial costs of a data breach. Competitive policies include preventative measures to protect businesses from a breach, and incident response measures in the event a breach occurs.
Data breach insurance often saves businesses more than they expect.
Several factors identified in an IBM-sponsored study from the Ponemon Institute can reduce the average cost to business per stolen record, which is $148.00:
- Incident response team—$14.00 reduction
- Employee training—$9.30 reduction
- Security analytics—$6.90 reduction
A comprehensive Cyber policy includes all these elements. Simply having Cyber Insurance in itself reduces the cost per record by nearly $2.00, according to the study.
ProWriters Helps You Educate Your Business Clients
When you’re a registered ProWriters broker, you can use our powerful platform to find and quote multiple cyber security insurance coverage policies from top carriers. These policies include all the cost-per-record-reducing features mentioned above.
In addition, ProWriters lets you find and quote policies that cover the costs of:
- IT forensics
- Notification of affected parties
- Credit protection
- Regulatory defense
- Fines and penalties
The next time a business client asks you, “Is cyber liability insurance worth it?,” be ready to tell them exactly why it is.
Download your free copy of our infographic, Cyber Risk Management 101. Use it to help your clients make sense of their exposure, and how the right data breach insurance policy can protect them.