To begin with, cyber insurance is not expensive when a company understands how the cyber threat environment can affect them, both financially and intangibly. The globalized nature of interconnected networks in which companies operate, exposes them to threat actors located anywhere in the world which are capable of affecting each and every company’s network security.
Cyber security is certainly a complex problem for all companies when threat actors consistently attempt to damage or disrupt computer networks or systems on an hourly basis.
Cyber insurance is expensive when a company purchases the wrong policy or doesn’t understand the coverages purchased. When an incident occurs, the last thing a company wants to hear is that they do not have coverage they thought they had to cover them. This can lead to hundreds of thousands of dollars of uncovered losses to the company. Indeed, in this occurrence, cyber insurance is extremely expensive.
In recent years, the key problem with cyber insurance premiums, is due to the influx of many companies purchasing cyber insurance for the first time which created a buyers market. Likewise, this created what is called a “soft market”. When there is a big demand, and carriers are anxious to grow their premium volume, premiums are considered “soft”, meaning they are either under priced or the best premium the carrier is willing to offer. During a “soft” market, underwriting tends to be more lax.
Despite the influx of companies still purchasing cyber insurance for the first time, cyber insurance premiums have since “hardened”, which has created a “hard market”. A hard market means much higher and more expensive cyber insurance premiums and tighter underwriting requirements.
Indeed, even with great demand, a “soft market” was not sustainable due to the significant risk exposure that was created with an influx of new cyber insurance policyholders. Therefore, “soft” cyber insurance premiums and minimal underwriting could not hold and it is not likely they will soften anytime in the foreseeable future.
The main objective of purchasing a cyber insurance policy is to mitigate your company’s cyber risks and to provide the funds needed to assist with the costs incurred when dealing with the aftermath of an incident. When done correctly, cyber insurance is not expensive.
Please reach out to us for assistance with obtaining a cyber insurance quote for your company, or for help with an upcoming cyber insurance policy renewal.