What is Cybersecurity Insurance Underwriting and How Does It Work?
Cybersecurity is not something to be taken lightly. Protecting yourself and your company from a cyberattack is essential in today’s world. And one way to do so is by using cybersecurity insurance underwriting.
In this article, we will discuss cybersecurity insurance underwriting and why it is so important.
What is underwriting cyber insurance?
First, a cyberattack is the use of malicious codes on computers, logic, or data to leak or hold your sensitive information. Cyberattackers take advantage of vulnerabilities to access or obtain sensitive information or cause your devices to work improperly or not at all. It is critical that businesses, regardless of size, have cyber insurance and understand underwriting.
Cyber underwriting is the process insurers use to evaluate an organization to determine the scope of a policy and takes several considerations into account. Cyber insurance underwriters must weigh a company’s organizational risks and the extent to which these are mitigated through risk management and cybersecurity. After evaluating the monitoring software, data management, security procedures, breach history, and relative benchmark against similar companies, among other elements, insurers issue the best plans that cover lost assets from a cyber event.
It is vital for businesses to invest in the latest cybersecurity technologies available to detect any cyber threats. This will help contain a threat and lessen reactive reliance on cyber insurance.
Cyber insurance coverage
You need cyber insurance for several reasons, such as data loss, business interruption, lost profits, extortion and ransom payments, fines and penalties imposed by regulators, credit and identity monitoring services for those impacted by a breach, and reputation management. Let’s break it down.
First-party coverage
First-party cyber insurance covers the costs of investigating the cybersecurity incident, risk assessment of future cybersecurity incidents, lost revenue due to business interruptions, ransomware attack payments based on coverage limits, and notifying customers about the cyber incident and providing them with anti-fraud services such as credit monitoring.
Third-party coverage
Third-party or cyber liability coverage covers costs for an attorney and court fees associated with legal proceedings, settlements and court judgments, and regulatory fines for noncompliance. General liability insurance excludes coverage for data breach-related liability claims, so if your business stores customer data, you’ll want to consider a separate cyber liability insurance policy.
Technology errors and omissions
A cyberattack can keep you from fulfilling your contractual obligations and delivering customer services. Errors and Omissions (E&O) cover errors in the performance of or failure to perform your services. This can include technology services, like software and consulting, or more traditional professional services, like those provided by lawyers, doctors, architects, and engineers. This type of cyberattack can cause your service to go down and impact many customers rather than an issue with an individual.
Applying for cyber insurance
Cyber insurance underwriters look for many different things. However, when it comes to applying for cyber insurance, businesses can manage an effective, accurate, and transparent process.
Compile accurate company data
Cyber insurers count on accuracy and detail in your application. To help speed this process along, businesses can do their due diligence by consulting with IT departments, collecting accurate data, and quantifying network data and customer information.
Be honest
Honesty is the best policy. All known information, risks, mitigation procedures, and existing cybersecurity will be utilized in granting a suitable policy and will avoid the risk of a policy being terminated in the future due to inaccurate information.
Invest in cybersecurity before applying
If your business lacks cybersecurity, investing in it before applying for cyber insurance is important. Cyber insurers will likely deny your application without cybersecurity, but relying on multifaceted monitoring software empowers your business with full visibility to detect and contain cyber threats before even relying on your insurance policy.
Cyber insurance underwriters
Cyber insurance underwriters are experienced in the continual changes and risks associated with cyber insurance. Underwriters work to protect insurance agents and brokers by making policy recommendations. Cyber underwriters look for several risks when they price insurance policies.
Use Multi-factor authentication
Multifactor authentication is an extra step to make sure your data is secure. Passwords are not enough these days and can be compromised. Multifactor authentication sends a code to your email or via text message. These codes are used to authenticate the user. Multifactor authentication is another layer of security when you’re trying to access sensitive information.
Have a data-management strategy
Cyber underwriters also like to see a data-management strategy. They want to see that the company has stored and segregated data properly. For instance, client records should be split across multiple servers so that not all the data is lost if one server is compromised.
Run endpoint detection and response
Endpoint detection and response tools continuously monitor all devices connected to your network to ensure they are secure and have not been compromised. This is usually recommended by cyber insurance underwriters. Endpoint detection and response are critical when it comes to cyber security. For example, an employee using a compromised device could click on a suspicious link and unleash an attack on their company’s network.
Separate backup data from the main network
Backing up your data is another critical priority cyber insurance underwriters look for. It doesn’t do any good when businesses only back up to their servers and store the backup on those same servers. If your system is compromised, you could lose your data. Underwriters want to see your data stored segregated from the main network and even stored offline in an off-site location. This will make it easy to recover your information if you suffer a ransomware attack.
Make risk management a priority
Lastly, cyber insurance underwriters look for a few other essentials. These include any policies and procedures you have in place regarding cyber risk management, whether or not you have a key person managing these policies, and that the key person knows about the different kinds of data you are storing and how it is stored.
Final word
Finally, regardless of size, every company should value cybersecurity. You want your clients to trust you and be confident that you will keep sensitive information confidential and secure. Having a plan in place and cyber insurance will add another level of security for your company.
This article was written by Katie Meyers, an SEO Specialist at SEO Design Chicago. Before joining the SEO Design Chicago team, she interned for them, as well as interned as a Content Writer at HZD Creates. Katie is from Washington State and has an AA and a Social Media Marketing Certificate.
