As threats increase in the digital world, cyber attacks are inevitable for organizations. There is a growing need among companies to be prepared for security incidents such as ransomware, which is why they are eager to obtain financial protection such as cyber insurance, writes, Darren Williams, Founder and CEO, BlackFog.
Cyber insurance has grown exponentially over the past few years. Instead, they are expected to be a A $20 billion industry by 2025 and now sits at $7.8 billion. While the risk of disruption and attack benefits cyber insurers, the high cost of such threats also increases their losses.
Therefore, insurance providers always raise their premiums to minimize losses, which makes it impossible for small companies to get coverage. Other critical factors such as the global financial crisis, supply shortages, and skills shortages are adding to the problem. According to reports, the number of businesses that cannot afford cyber insurance is it will double in 2023.
So, in this tough market, how can small businesses afford to pay so much and get the cyber insurance they need?
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What makes cyber insurance so different from its peers?
The basic process of cyber insurance is the same as any other type of insurance. Insurers evaluate potential risks based on a number of known factors and assign a number and value based on the likelihood of a potential problem and the impact it will have on the insurance company.
However, the problem is that cyberspace is very complex and dynamic, which makes the potential changes difficult to explain. Let’s take life insurance as an example, where the changes make more sense. Salaries and benefits are based on the individual’s health and lifestyle. Factors such as age, BMI, smoking, mental health, medical history, family medical history, occupation, and drug use are taken into account.
Any variation in these factors is reflected and when they change, so do the payouts and the amount of the spread. For example, if a person smokes regularly, has a bad medical history, and is elderly, they may receive higher premiums or no treatment at all. On the other hand, a young, fit and healthy person will get insurance coverage at a cheaper price.
In contrast, cyberspace is more complex and dynamic, where changes are infinite and often invisible. For example, insurers can test a company’s security and determine whether it is strong enough to be properly protected. But a new software release or update can create hundreds of new problems on the same day. According to National Vulnerability Databaseapproximately 50 new vulnerabilities were discovered every day in 2021.
There is also the fact that attackers are constantly improving their skills and developing new tools to exploit vulnerabilities effectively. Attack techniques are also evolving with new ways to compromise the victim’s IT equipment. Take ransomware, for example, where attackers often encrypt the victim’s data and demand a ransom in exchange for private keys.
However, ransomware attacks have recently changed, with a double takeover threat. Criminals are now releasing data in addition to encryption. Therefore, organizations now have to worry about data leakage on top of existing threats. Just having a backup of your data is not enough.
This constant change makes it difficult for insurers to understand and track business risks. Agents still don’t know what risks are acceptable to their clients. That’s why we keep looking for the best premiums with the most important features.
Complicated System Requirements Create an Unfair Two-Party System
In addition to expensive premiums, insurance providers tend to set strict and complex eligibility criteria. For example, businesses may need security measures to support them.
Such strict procedures often create a system of two unequal parts. Companies that do not have the funds to purchase security solutions are often denied the protection of cyber insurance. Threat actors are also aware of this, making it easier for them to target these small companies.
Therefore, without the insurance capital to back them up, such businesses are also vulnerable to ransomware demands and threatening data leaks. As a result, small businesses are always vulnerable to cyber threats.
Can Small Businesses Still Afford Cyber Insurance?
While it may take time for the cyber insurance market to mature and expand coverage to all levels of the industry, there are effective strategies that companies can use to qualify for insurance.
The process is simple – to convince insurers that your organization is ready to defend against the most complex threats. The defensive mind goes a long way in making that guarantee. First, organizations to implement solutions that reduce their risk as much as possible. Most of your marketing efforts should focus on solutions that can detect or mitigate the impact of ransomware threats.
This is because ransomware is one of the cheapest and most widespread threats right now, which also has an insurance business. Last year, a major insurance provider AXA announced that they will stop paying for ransomware to their customers because it is greatly increasing the company’s risk. Therefore, organizations that can demonstrate the ability to detect ransomware threats early and minimize damage can be protected at a lower cost.
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Data exfiltration is another major problem that worries many insurance companies. As two-factor authentication is becoming increasingly common in ransomware attacks, data leaks are helping threat actors expand their targets. Therefore, early detection and prevention of attempted discharges goes well with insurance providers.
How can small organizations protect themselves against ransomware and data theft while staying within their tight budgets? A possible solution is to use a machine. Using complex methods such as threat detection, response, and access authorization can help free up both financial and human resources.
Automation solutions provide these multiple services in one integrated software. Such solutions mean that organizations do not have to spend money on different devices.
While both ransomware and data breaches are inevitable in today’s hostile environment, small companies can still punch above their weight using cyber security. Implementing collaborative processes with streamlined and streamlined processes can help organizations meet their needs and free up their budgets for more revenue.