Cyber liability insurance has become a must-have for businesses facing the growing threat of cyberattacks. Offering protection against legal fees, operational losses, and data recovery costs, it’s a critical safety net. However, insurers are raising the bar, requiring businesses to prove they have robust cybersecurity measures in place to qualify for coverage.
Whether you’re applying for cyber insurance for the first time or renewing an existing policy, it’s crucial to show that your security strategy balances proactive measures with responsive capabilities. Failure to meet these increasingly stringent standards could result in higher premiums – or being denied coverage altogether. Use this checklist to evaluate your readiness and ensure your organization meets insurers’ key security requirements.
To determine eligibility and premiums, cyber insurance underwriters assess your business’s size, industry, and level of cybersecurity. While a startup with minimal online exposure might secure lower premiums, industries like healthcare and finance – handling sensitive data – typically face stricter requirements and higher costs.
As cyberattacks increase, insurers are tightening their requirements, demanding businesses implement core IT security measures to qualify for coverage. Meeting these standards not only protects your organization but can also help lower premiums.
How many of these essential cybersecurity controls can you check off?
Effective cybersecurity starts with vulnerability management – a proactive approach to identifying, evaluating, and addressing weaknesses before they can be exploited. Insurers often require organizations to implement a comprehensive vulnerability management framework to quickly detect and remediate security gaps. Regular vulnerability assessments are essential to evaluating your attack surface, covering everything from workstations, mobile devices, and servers to databases, firewalls, and network infrastructure.
By maintaining an up-to-date vulnerability management program, you can ensure your security measures are effective against both internal and external threats. For a detailed look at your organization’s vulnerability profile, consult your managed service provider (MSP) for a report, or contact Omega Systems today to schedule a vulnerability assessment.
Human error remains the ultimate vulnerability in cybersecurity programs. You can surround your environment with the finest technical defenses in the market, but an individual’s momentary confusion, fatigue, or error in judgment can potentially thwart or compromise your technical controls. Raising security awareness and vigilance through ongoing training is necessary for any company aiming to succeed in the digital age. It is essential to educate and remind employees about the critical role they play in security risk management. Seasoned IT service providers can automate this vital process and deliver routine security reminders and hyper-realistic phishing simulations to battle-test your users against current threats that haunt the web and their inboxes.
Outsourcing key business functions can enhance efficiency and drive growth, but it also brings additional cybersecurity risks. Cyber insurance providers increasingly require organizations to demonstrate robust vendor due diligence and third-party risk management to qualify for coverage. This includes having a clear plan to identify and mitigate vulnerabilities introduced by suppliers, consultants, or partners.
Third-party attacks, or supply chain attacks, have surged by 742% in recent years, as cybercriminals exploit weaknesses in vendor ecosystems to breach organizations. Assessing a partner’s security practices before formalizing relationships helps address these vulnerabilities, strengthens your overall security posture, and ensures compliance with insurer standards.
Insurance eligibility requirements also include keeping track of permissions to access company resources – especially private data. This involves the implementation of the so-called principle of least privilege, allowing them the bare minimum access necessary to complete their tasks. This best practice prevents misuse of sensitive data, deters the spread of malware, and keeps hackers from wreaking havoc on your network. Managing user permissions will not only help you qualify for cyber insurance but also get you one step closer to your industry-specific compliance standards.
Compliance regulations that require data privacy protection include:
Another critical component of access control is multi-factor authentication (MFA). In the wake of many high-profile cyberattacks, usernames and passwords have proven grossly inadequate on their own. As such, most cyber insurance providers now require the use of MFA for new or renewal coverage.
MFA is one of your organization’s most potent (and cost effective) tools to minimize account-compromising attacks. It augments the heavily exploited username-password verification method by requiring additional authentication factors, such as a biometric identifier, a knowledge-based factor or a push notification sent to a recognized device. Ensuring vendors, partners, remote workers and everyone else in your company adhere to your MFA protocol can significantly lower your risk of a data breach. In today’s hybrid workplace model, MFA is a requirement – not an option.
Some providers may even require zero trust security controls – which take MFA a step further and require all users both within and outside an organization’s network to continuously authenticate and authorize permissions before gaining access to the network and its resources.
Today’s digital economy is powered by data, and when data is deleted, corrupted, compromised or stolen, every minute counts. Operational downtime due to data loss costs smaller organizations thousands of dollars per hour and larger companies millions until the problem is resolved. The lack of an adequate data backup system can not only prevent you from securing effective cyber insurance, but it can shut down your business: a study shows that 60% of small enterprises that lose their data are forced to shut down within six months.
Now more than ever, it is necessary to build digital resilience by securing your backups. For maximum protection, look for a backup and recovery option that takes a hybrid approach and secures your backups both on-premise and on a cloud-based remote server to help you rapidly resume operations in the event of a disaster or disruption.
Your cybersecurity incident response plan should be purpose-built and regularly updated to rapidly detect, investigate, respond to, and remediate all cyber incidents in the aftermath of such events. This can be an arduous task that even large enterprises will need help to execute. To effectively combat today’s evolving threats, you need the support of IT security professionals with access to round-the-clock resources, next-generation technology and AI-powered capabilities.
As part of the cybersecurity due diligence process, insurance providers may ask about a Security Operations Center – a dedicated team responsible for 24×7 security monitoring and incident response. Premier MSPs and MSSPs can act as your SOC, freeing up your time and resources and implementing proactive threat protections to keep malicious threats out of your network.
It’s also important to be aware of the potential fallout associated with not meeting certain insurance criteria. Companies may choose to misrepresent their security practices or programs in order to secure better coverage. Other organizations may overhaul their security practices initially in the hopes of improving their coverage and lowering their premiums, only to abandon said strategies during the course of their policy.
Both scenarios are ill-advised and considerably risky. Recent statistics on cyber liability insurance revealed that 27% of data breach claims and 24% of first-party claims resulted in partial-payout or non-payout due to specific exclusions within the policy. These percentages are predicted to rise in the coming years as cyberattacks increase in sophistication and insuring cyber risk becomes more and more complex.
Without ongoing cybersecurity measures in place, it’s only a matter of time before your business falls victim to a cyberattack. And unfortunately, your insurance coverage will not save your business from certain financial losses and reputational damage if you cannot prove the existence of adequate preventive and responsive security strategies.
If you’re looking to bolster your security program to aid in your cyber insurance process, contact our security experts at Omega to get started.
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