The Ongoing Convergence of IT Security and Cyber Insurance

Do I Really Need To Worry About Getting Hacked?

The rapid expansion of the cyber threat space affects business owners in just about every industry. Information security risks multiply at an exponential rate, which is why SynchroNet clients know that getting hacked is something they can count on happening these days.

At SynchroNet, we explain to our clients that cyber attacks can be prevented only to a certain extent; what this means is that business owners should have mitigation strategies in place when this happens.

In the past, information security was mostly preventative, but the days when you could install a firewall plus antivirus software and call it a day are long gone. Realistic IT strategies start with not making it easy for hackers to ply their nefarious trade, but they also assume that hackers will eventually get through, which calls for a methodology to mitigate the damage of cyberattacks. To this effect, modern cyber security relies on effective IT work combined with business liability protection.

How Important Is Cyber Security Insurance?

Cyber security insurance has been offered for a little over a decade, and the reason this kind of business liability coverage was launched in the first place is because insurers realized that cybercrime had reached a rising point of no return.

According to a 2021 Bloomberg report, the global losses caused by malicious cyber attacks are estimated to be around $6 trillion, and they are expected to climb by more than $10 trillion over the next three years.

The actuaries and underwriting staff at insurance companies have correctly assumed that all commercial operations will get hacked at some point; this is why business owners should be prepared to repeal attacks, mitigate losses, and ensure that businesses continuity can be properly implemented when needed.

Why Is SynchroNet Looking At These Trends?

What our IT security specialists are noticing is a natural convergence of cyber insurance and best data protection practices. At this time, the convergence is developing organically, and it can be compared to what we have previously seen with physical and cyber security, which many business owners handle as a single business process.

At SynchroNet, some of our new clients contacted us after going through difficulties with getting cyber security insurance. In some cases, the policy premium cost was too high, and it could only be lowered if a proper data backup and recovery system was implemented. In other cases, the client was actually dropped from coverage because a loss investigation revealed serious gaps in data protection.

Why Did Cyber Security Rates Go Up?

The cyber security insurance industry went through a bit of Turmoil around 2006, when revenues from the CryptoLocker ransomware reached $30 million. Once insurance companies started making payouts for ransomware attacks, the industry figured out that major changes were needed in order to make it more financially sustainable. These changes translated into higher premium rates and certain requirements that determine who is eligible for coverage.

You should not be surprised by cyber insurance providers requesting detailed network security audit reports these days, and this is good news for both business owners and information security professionals.

If your office data network is not properly secured for the purpose of mitigating cyber risks, insurance companies may not approve your company for cyber coverage; if you are approved for a policy despite deficiencies, there is a good chance you will be stuck with paying higher premium rates for limited coverage.

This can certainly be a problem for business-to-business (B2B) companies that deal with clients and vendors who require cyber security insurance. It is also important to note that this convergence may eventually progress into hard requirements to do business in some jurisdictions.

Can SynchroNet Help Me Get Lower Rates?

The seasoned IT security professionals of SynchroNet are ready to help your business obtain and retain comprehensive cyber security insurance at reasonable premium rates. If you have any questions about IT security or cyber insurance topics, please feel free to contact our office today so that we can discuss your options.