The last year has brought some of the largest data breaches in history, from the still-unfolding Microsoft Exchange vulnerability to last year's Blackbaud incident (affecting more than 5.5 million people) and SolarWinds hack (prompting Senate hearings). As the scope of these attacks grow, and interconnected systems become more complex, the cost of cyber insurance is going up. One report says rates could rise as much as 50 percent this year.
What is cyber insurance?
Cyber insurance is a relatively young and fast evolving line of insurance products for businesses that broadly cover costs related to information technology.
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Today, cyber insurance—also known as cyber risk insurance or cybersecurity insurance—protects businesses from the unpredictable impact of hackers and other cybercrimes ranging from malware to ransomware and any other method used to compromise a system and its data. It should be noted that more common general liability insurance policies do not cover the types of risks covered by cyber insurance. About one-third of U.S. businesses are believed to hold cyber insurance policies, a market that's expected to grow to $7.5 billion in the next decade. Insurance providers note that any organization that uses technology or the Internet faces cybersecurity risks. In the case of healthcare providers, those risks include fines and other penalties related to HIPAA compliance.
SEE ALSO: The Complete Guide to HIPAA Violations
"Hackers can target personally identifiable information (PII) or personal health information (PHI) you keep on your business’ computers," explains The Hartford. "These coverages can help if your business’ computers get a virus that exposes private, sensitive information; customers or patients sue after your business loses PII or PHI; or you’re faced with high public relations costs to help protect your business’ reputation after a data breach."
How much does cyber insurance cost?
The cost of cyber insurance policies varies greatly, depending on the size of the company and its annual revenue. Other factors include the industry in which the business operates in, and the types of data that the business handles. Not surprisingly, healthcare organizations will typically pay more for cyber insurance than other types of businesses. Insurance companies will also evaluate a potential client's IT and network security practices. Following cybersecurity best practices, providing ongoing cybersecurity training, and implementing HIPAA compliant email could all help reduce the cost of cyber insurance. By at least one account, a cyber insurance policy can cost between $650 to $120,000 a year.
How much will cyber insurance rates rise?
According to New York State, ransomware insurance claims jumped by 180 percent from 2018 to 2019, and then doubled from 2019 to 2020. Both the number and size of data breaches seem to grow each year, meaning that the potential liability businesses face is increasing, as is the cost of covering them. In September, S&P Global said that "commercial and private cyber insurance premiums total about $5 billion, and we expect this to increase 20 percent to 30 percent per year on average in the near future." Last month, financial analysis giant Moody's published a report which predicts "low double-digit rate increases across the board and steeper increases for loss-hit accounts." And just last week, AON PLC said cyber insurance rates could rise by as much as 50 percent. The AON report foresees that rate increases of 20 to 50 percent will be implemented in 2021 as trends that began last year continue at an accelerated pace. While data breach and privacy events declined last year, AON notes, ransomware incidents increased 486 percent between 2018’s first quarter and the fourth quarter of 2020.
Do you need cyber insurance?
Insofar as nearly every business and organization relies on technology and the Internet to operate, nearly every business and organization should consider buying a cyber insurance policy. "Not every business will need millions of dollars of coverage, and for many individuals who don’t access sensitive data on their home computer, the costs can frequently outweigh the risks," notes TheNextWeb. "But in today’s world where even small mom-and-pop businesses are increasingly reliant on digital tools and cloud storage, this is one protective policy that is well worth your consideration." Although cyber insurance will help offset the costs of a data breach, the best front-line strategy is to prevent data breaches from happening in the first place. Having good security practices also reduces your potential exposure, and thus your cyber insurance costs.
Start with Paubox
The weakest link in most business computer networks is not the firewall or router, but the humans sitting at computers. And email remains the most common way computers are compromised. Paubox Email Suite Plus doesn't just allow you to send HIPAA compliant email. It also includes inbound security tools to block malware, viruses , and spam . It also includes our patented ExecProtect solutions, which stops display name spoofing emails. Paubox Email Suite is HITRUST CSR certified and offers blanket TLS encryption and two-factor authentication to keep your emails safe. Best of all, it's easy to use, requiring no special web portals or separate passwords for recipients to read your emails.
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