Want cheaper cyber insurance? Security leaders say improving resilience has helped them save on coverage

By Solomon Klappholz for IT PRO
Thursday, July 4, 2024

• 620
• More

Three-quarters (76%) of respondents said it enabled their organization to qualify for coverage, 67% said it enabled their organization to get better priced coverage, and 30% stated the investments helped their firm to get better priced policy terms.

Commenting on this trend, Ilia Kolochenko, CEO at ImmuniWeb and adjunct professor of cybersecurity at Capital Technology University, said Howden’s report sheds light on subtle trends on the global cyber insurance market.

“First, less companies are willing to invest a considerable amount of money in cyber insurance after having a pretty bad experience in the past, when insurance coverage was denied under a plethora of reasons and contractual clauses inconspicuously incorporated into the insurance agreement,” he explained.

“After burning their fingers with an insurance policy, some companies either entirely re-allocated insurance budget to improve their cybersecurity controls and hire more people, or procured the bare minimum of cyber insurance as it may be required by law or be a prerequisite of their external stakeholders, such as auditors, investors, clients or partners,” Kolochenko added.

“Thus, cyber insurance businesses are trying to retain and attract new clients with more attractive premiums and other conditions.”

The second trend Kolochenko identified was that cyberspace is becoming less of an unknown quantity for insurance firms, with better access to the historical data needed to quantify the cyber risk posed to businesses.

“The cyber insurance industry is becoming mature: insurance firms now have enough historical data about incidents of all kinds to offer data-driven and meticulously calculated premiums and other terms to insurees of all sizes. Hence, when you know exactly how to quantify the impact and probability of all insured risks, you hedge your own risks and thus can offer more competitive conditions while staying profitable,” he said.

“Of note, many insurances flatly excluded some types of unpredictable or high costs from being covered (e.g. legal defense of employees of a breached company when sued in their personal capacity, crisis communications teams and media relations, payment of ransom). Eventually, insurance firms now have a broad leeway to optimize their prices.”

The final factor shaping this shift in the market was the fact that improved levels of cyber readiness have made the business of insuring against cyber attacks mch less risky, helping insurers offer more competitive rates.

“Most large companies that can afford to invest in cyber insurance, have significantly increased their cybersecurity and cyber resilience, including rapid disaster recovery, thereby making cyber insurance a less risky business.” Read Full Article