5 Reasons Cybersecurity Insurance Alone Isn’t Enough

Over the past few years, the cybersecurity insurance market has boomed as the demand for protection from cyberattacks has increased alongside the constantly increasing number of sophisticated attacks. That market growth is projected to increase, with a predicted rise from $11.9 billion in 2022 to $29.2 billion by 2027.

Cybersecurity insurance is a necessity for organizations of all sizes, however, it is a myth that cybersecurity insurance alone is all your organization needs to protect itself from the repercussions of a cyberattack. Here’s why cybersecurity insurance alone isn’t enough:

1. Baseline Cybersecurity Requirements to Qualify for Cybersecurity Insurance

Before even getting approved for cybersecurity insurance, most insurers require that basic best practice security measures are in place and that the organization maintains these standards during the coverage period.

These measures include:

• Multi-factor authentication
• Internal and external vulnerability scanning
• Endpoint detection and response
• Cybersecurity training
• Up-to-date and patched systems
• Strategic plans, such as disaster recovery, business continuity, and incident response plans

Cybersecurity insurance is not meant to serve in place of cybersecurity practices – it’s meant to cover risks after a company has put the right protections in place to reduce those risks.

2. Exclusions, Exclusions, Exclusions

Once you have a cybersecurity insurance plan in place, there are a variety of exclusions that may not be covered. Some of the most common exclusions include:

Loss of portable devices – If a lost device leads to a breach, this may not be covered; some insurers are willing to modify this exclusion if the device is encrypted

Failure to Meet Minimum Security Standards – Organizations need to meet and maintain the insurer’s standards (such as those referenced above) to have a claim approved

War, invasion, or terrorism – Any attacks from state-sponsored or political origins can be lumped under this exclusion language

These exclusions can lead to denied coverage after a security incident has occurred.

3. Loss of Trust in Your Organization

While cybersecurity insurance can help cover financial losses, such as legal expenses, ransomware payments, and forensic costs, there are some areas that are hard to put a number on, and your organization’s reputation is one of those areas.

Some insurers offer coverage or standalone policies for restoring a brand’s image or covering lost profits from a harmful event. While financially helpful, it does not automatically bring back the trust your customers once had in your organization, and it can be time-consuming to rebuild your reputation.

4. Poor Cybersecurity Posture Can Lead to Higher Premiums

As the cybersecurity threat landscape grows and ransomware events increase, so do premiums for cyber insurance. Last year, there was a 74% increase according to the S&P Global Market Intelligence analysis.

The best way to combat rising premiums is to focus on improving your organization’s cybersecurity posture. Assessing your organization’s current security maturity and working with a managed security service provider to help fill any cybersecurity gaps can lead to more favorable coverage and premiums.

5. Cybersecurity Insurance is Ever-Changing

The cybersecurity insurance market is constantly evolving to account for the new threats and claims that come through for insured parties. What will not change is the need for your organization to have cybersecurity best practices in place that mitigate risks and the impact of cybersecurity incidents to your business regardless of cybersecurity insurance.

While having cybersecurity insurance is a must with today’s threat landscape, on its own it isn’t enough to protect your organization from all of the potential impacts of a breach or cybersecurity event. Cybersecurity insurance should be complementary to a robust cybersecurity program to ensure your organization is protected against the latest threats and that your risks are mitigated.