Cyber Insurance is an essential risk management tool for both small and large size businesses. Modern insurance carriers offer step-by-step direction on how to protect from cyber attacks, and cover losses if there is an attack. There are a number of different insurance packages available to all sorts of businesses, and each client has their own specific needs. Cyber exposure can generally be covered by two major categories of Cyber Insurance- First Party Liability & Third Party Liability.
First Party Liability coverage will pay for the insured’s own financial loss arising out of a cyber breach- defined as unauthorized access and retrieval of sensitive information by an individual, group, or software system. It’s important to note that the vast majority of cyber claims stem from first party losses. First party losses come in many different forms, some examples are- Business Interruption, Incident Response, Data Loss, Potential Ransom Payments, & Notification/ Legal Costs.
Third Party Liability coverage provides protection in the event a client or other party suffers losses due to the insured’s cyber breach. For example, a client’s Social Security Number is leaked in a breach: third party liability coverage will defend against or pay those damages. A more complex example is if a cybercriminal were to install malware to a third party’s system by gaining access through the first party’s (insured’s) system: in this case, the first party’s cyber insurance will defend against or pay the losses suffered by the third party.
The cyber insurance world is busy in 2021. According to Beazley, a leading insurance provider, ransomware claims are up 239% since last year, and the average ransom payment is $178,000. Almost half of all cyber attacks were aimed at small businesses, and only about 14% of small businesses were prepared to defend themselves. The COVID-19 Pandemic forced businesses and individuals to work from home, and cyber criminals jumped on the opportunity. A Remote Desktop Protocol (RDP) port is a popular tool to work from home. However, open ports allow a pathway for ransomware to be deployed, and 60% of ransomware attacks last year originated from open RDP Ports, per Tokio Marine HCC, another leading provider. Some insurance carriers even require Multi-Factor Authentication (MFA) on all business systems in order to be eligible for cyber coverage.
We work with a number of different cyber insurance carriers and can find the right solution for your organization or business. We are constantly working with our clients to tailor policies to fit their needs and stay ahead of cybercriminals. Please reach out to us today to ask how we can help you understand an important but complex market!