Cybersecurity Insurance in 2023: A Must-Have for Businesses

We’ve all heard about the importance of cybersecurity, but do you know why it is so important for businesses to consider investing in a cybersecurity insurance policy? In today’s digital landscape, cyber threats are an ever-present part of doing business. The risks associated with not having adequate protection can be costly and damaging to your business operations. Let’s take a look at why it will become even more critical that businesses have proper cybersecurity insurance coverage in 2023.

Why You Need Cybersecurity Insurance

As businesses move more of their operations online, cyberattacks have become far more common. The cost of these attacks can be devastating; not only do you need to repair any damage done, but you also need to take measures to prevent similar attacks in the future. This can be costly, both financially and in terms of time spent trying to repair or replace lost data or systems destroyed by hackers. This is where cybersecurity insurance comes into play. It helps protect your business from financial losses caused by a cyberattack or data breach, which is why it should be considered a must-have for any business with digital operations.

Data breaches are becoming increasingly common as hackers become better equipped with more sophisticated tools to access sensitive information. According to the 2022 Cost of Data Breach Report, there were 22 billion data records exposed in 2022 alone. For comparison, the 2018 report cited 4.1 billion records exposed. These breaches can cost companies millions of dollars each year – costs that could be mitigated by having sufficient cybersecurity insurance coverage.

What Does Cybersecurity Insurance Cover?

Cybersecurity insurance typically covers costs associated with responding to and recovering from a cyberattack or data breach, including the cost of hiring IT professionals to help identify and mitigate any potential threats as well as legal fees incurred when defending against lawsuits related to the attack or breach. It also covers any fines imposed by regulatory bodies if sensitive customer information was exposed during the attack or breach. Additionally, some policies offer coverage for lost income due to downtime caused by an attack or breach as well as public relations expenses associated with restoring customer trust after an incident has occurred.

Due to the rise in claims and payouts, insurance carriers have been cracking down on the criteria it takes to be eligible for cybersecurity insurance. They are putting more of the onus of protecting a business on the business itself.

What are Some of the Changes to Cybersecurity Insurance in 2023?

Insurance companies have put requirements into place to qualify for a cybersecurity policy. We have gathered some of these requirements in the event of an incident:

  • Endpoint Security (EDR/XDR) Solutions
  • Phishing Training for Employees
  • Removal of Local Admin Rights
  • Privileged Access Management (PAM)
  • Multi-Factor Authentication (MFA)

These are a small part of the overall new requirements being asked for by insurance carriers.  The applications have grown to 30 pages, and proof of documentation is also required. If your cyber insurance company requires your company to have a Disaster Recovery (DR) plan in place, companies are being asked to provide a copy of the DR plan.

Increases Regulations & Compliance Requirements

In addition to data breaches, businesses must also be mindful of government regulations and compliance requirements related to data protection or face hefty fines or other penalties. As the world becomes increasingly digitalized, these regulations continue to evolve and become stricter across many industries.

With this increase in the complexity of regulations and compliance requirements, businesses need to have a comprehensive plan for protecting their data from hackers and ensuring they’re meeting all compliance standards set forth by governing bodies. Cybersecurity insurance can help protect your business from any potential liability stemming from non-compliance issues or government fines/penalties related to data protection/privacy laws.

Cyberattacks are Becoming More Complex

As technology advances, so do the tactics used by hackers when launching cyberattacks against companies and organizations. Cybercriminals are devising new ways each day to target businesses without detection while leveraging unsecured networks or unprotected systems for their own gain.

Without adequate security measures in place, organizations can be vulnerable to malicious attacks which can result in significant financial losses for affected companies due to stolen funds or sensitive customer information being compromised. Having a comprehensive cybersecurity insurance policy can provide peace of mind, knowing that any damages resulting from such an attack will be covered by your insurer rather than coming out of pocket directly.

No matter what industry you operate in, there is no denying that cybersecurity has become an essential tool for protecting your business operations both now and in the future. With increases in cybercrime activity as well as increasing regulatory scrutiny around how firms handle personal data, having a comprehensive cybersecurity insurance policy should be at the top of every company’s list when planning their strategy for 2023 and beyond. Investing now will help ensure that your business is prepared if (and when) disaster strikes instead of being left vulnerable with no safety net if things go wrong unexpectedly down the line. ERGOS Technology Partners is well-positioned to guide your business through the task of filling out your cybersecurity insurance questionnaire and increasing your cybersecurity posture. Contact our offices today to discuss how ERGOS can keep you in compliance, secure your business, and grow with you.

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