Cyber Insurance for Banks: What Heightened Cyber Risks Means for Financial Institutions

The discord surrounding the COVID-19 pandemic, especially in Spring 2020, brought increased cyber attacks targeting a number of industries. Hackers were laser-focused and ramping up their efforts to launch attacks against retail, manufacturing, government agencies, and especially healthcare. In the meantime, business owners scrambled to completely overhaul their normal workflows and allow employees to conduct business from the safety of their homes.

Throughout this crisis, financial institutions weren’t out of harm’s way. In fact, ransomware attacks on banks increased by 238% from February-April 2020. It’s never been more clear that cyber insurance for banks is an absolute necessity.

With a robust cyber security risk management plan in place, financial institutions can assure customers that they’re serious about protecting customer information. By combining strong cyber security practices with a Cyber Insurance policy, banks will help customers feel confident that their money and their information are safe.

How Much Do Banks Spend on Cyber Security?

Banks are a lucrative target for hackers as they collect exactly what hackers are looking to steal: personal information and money. Most financial institutions are well aware of the target on their backs and rightfully take cyber security very seriously. As cyber threats continue to increase in severity and sophistication, cyber security budgets are also on the rise.

According to a survey by Deloitte and Touche LLP. and the Financial Services Information Sharing and Analysis Center (FS-ISAC), banks increased their cyber security spending per employee from approximately $2,337 in 2019 to $2,691 in 2020. This equates to $850 million for JMorgan Chase and almost $900 million for Wells Fargo on an annual basis.

Cyber security has become a costly investment for banks and financial institutions. However, without it, their cyber liability would be too great and most customers would likely choose a more secure bank elsewhere. Cyber insurance for banks is now a necessary expense and investment.

Top Cyber Risks for the Banking Industry

While many customers may wonder: What banks have the best cyber security? Financial institutions have to maintain robust cyber risk management plans in order to keep a number of different cyber incidents at bay.

Here are the tops threats financial institutions are facing:

  • Social Engineering
    These cyber crimes, most commonly launched as phishing attacks, manipulate users into giving away personal information or credentials that hackers then use to gain unauthorized access to computer systems or networks.
  • Ransomware
    These attacks usually follow a form of social engineering and encrypt data or files so they’re inaccessible. The hackers then make a ransom demand and will not provide the encryption key or they threaten a data breach until the demand is paid.
  • Malware
    These attacks are launched through software that is designed to intentionally cause damage to a computer or network in order to gain unauthorized access.
  • Spoofing
    Hackers create a website that looks very similar to the financial institution they are trying to attack. When a user logs into the hacker’s website, believing it to be authentic, the hackers steal the user’s credentials to log into the real website and withdraw funds.

What Does a Cyber Insurance Policy Cover?

Close up of hands holding a smartphone to check bank account with a mobile banking app. Cyber Insurance for banks has drastically evolved since its inception and now offers broad, comprehensive coverage for a number of risks. Whether facing a ransomware demand through a phishing email campaign or a prolonged malware attack, a cyber insurance policy provides coverage for the many financial damages a bank may face, including:

First-Party Coverages

  • IT Forensic Costs
  • Notification Costs
  • Credit Protection Costs
  • Crisis Management Costs
  • Crime and Social Engineering

Third-Party Coverages

  • Costs related to the breach of Personally Identifiable Information (PII), including:
    • Credit card numbers
    • Social security numbers
    • Bank account information
    • Personal health information
    • Sensitive corporate information
  • Third-party claims related to:
    • Breach of contract
    • Negligent protection of data
    • Network security breaches
    • Transmission of software viruses
    • Denial of service attacks
    • Defense of regulatory actions
    • PCI fines and penalties and assessments

Additional Coverages

  • Multimedia coverage
  • Cyber extortion
  • Cyber business interruption
  • Hacker damage/digital asset damage

Finding the Best Insurance Coverage With ProWriters

When brokers help their financial clients find the best available cyber insurance for banks, their clients can rest assured that they’ll be protected when they face an attack. In addition to the coverages provided by a cyber policy, your clients will have access to risk management programs to reduce their cyber vulnerability and an individually formed incident response plan to mitigate the damages of any future attacks.

At ProWriters, we understand that while cyber insurance is necessary, it can be complicated and time-consuming for brokers.

With our Cyber IQ Comparative Rate Platform, brokers can quote and compare multiple cyber policies from multiple top carriers in just minutes. This allows brokers the flexibility to find the best possible coverage for their client’s specific needs, without the unnecessary process of duplicate data entry and manual comparison.

Register today to get started!