Cyber Insurance 101: What You Need to Know

Cyber insurance is a type of protection that helps you recover from cyber attacks and data breaches.

The average cost of a data breach is $3.86 million, according to a study cited in our article section on "Cyber Attack Statistics". This is a staggering amount that can put even the most well-established businesses out of commission.

Cyber insurance policies typically cover costs such as notification, credit monitoring, and forensic analysis. These costs can add up quickly, which is why having a cyber insurance policy in place is so important.

In fact, 60% of cyber attacks occur through phishing emails, as noted in our "Cyber Attack Statistics" section. This is why it's essential to have a robust cybersecurity system in place, including regular software updates and employee training.

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Cyber insurance is a must-have for any business that stores customer information or relies on technology, as most companies face inevitable cyber threats.

According to the Travelers Risk Index, 57% of business leaders think cyberattacks are inevitable, making it crucial to have a safety net in place.

Standard business insurance products don't cover losses from cyber events, leaving companies vulnerable to the full cost of ransomware attacks, business email compromise scams, and other cybercrimes.

The average ransomware attack costs USD 4.54 million, not including ransom payments, which is a staggering financial toll that can cripple a business.

Cyber insurance policies can help companies limit their damage, recover more quickly, and raise their overall level of cyber resilience by covering ransom payments, malware remediation, and other costs.

Protection is a top priority when it comes to cyber insurance. Cyber insurance can help cover the costs of restoring systems and data after a cyberattack. Many cyber policies pay for incident response, system repairs, forensic investigations, and other services needed after a cyber event.

Forensic investigations are crucial in identifying the source and extent of a cyberattack. A reputable cybersecurity vendor can help with forensic investigations, which can be included in a first-party cyber policy.

Cyber insurance can also help with breach legal counsel, notifications, victim credit monitoring, cyber extortion, data recovery, business interruption, and loss of revenue. These costs can be significant and may not be covered by other types of insurance.

Here are some specific examples of what cyber insurance can cover:

Reputational harm is another area where cyber insurance can provide protection. A robust cyber insurance policy can help cover the cost of marketing and public relations efforts to restore a company's brand and public image after a breach.

Cyber insurance can also help with regulatory investigations and compliance costs, including fines and penalties. This is especially important in highly regulated fields like healthcare and financial services.

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Cyber insurance policies have exclusions that can leave organizations vulnerable to financial losses. These exclusions include losses caused by insider threats, acts of war, and exploits of known vulnerabilities.

Some common exclusions include:

These exclusions can be costly, especially for organizations that rely on their data and systems to operate.

Cyber insurance can be a lifesaver in the event of a cyberattack, but it's essential to understand what's typically not covered. Cyber policies often exclude losses caused by vendor or partner breaches, which can be a significant risk for companies with complex supply chains.

Some cyber policies may offer third-party breach coverage for an added cost, but it's crucial to review the policy carefully. Social engineering attacks, like phishing, are also often excluded, but social engineering coverage can be purchased separately.

Losses caused by insider threats, such as malicious or negligent employees, are rarely covered by cyber insurance. This is a significant concern, as insider threats can be particularly difficult to detect and prevent.

Many cyber policies consider attacks from nation-states or other governments to be acts of war, and therefore, they won't cover these losses. If hackers exploit a known flaw that the company failed to fix, the cyber policy may deny the claim.

Here are some common exclusions to be aware of:

Reputational harm is a significant concern for businesses, and it's essential to understand what it entails. Reputational harm is the ongoing profit impact of a cyber event due to brand reputation damage, usually limited to a specific period.

This type of harm can occur after a publicized cyber event, such as a privacy event or security breach. For instance, a company may experience aversion to its brand, leading to a loss of customers and revenue.

Reputational harm coverage can help offset the financial costs associated with restoring a company's reputation. This can include marketing and public relations efforts to rebuild the brand image.

According to Example 10, reputational harm is a key aspect of cyber insurance, and it's essential to consider this coverage when purchasing a policy.

Here are some key points to consider when evaluating reputational harm coverage:

The shift to remote work has exposed organizations to a new level of risk. This is due to employees accessing applications, assets, and systems through private networks and personal devices.

As a result, the attack surface has dramatically increased. The proliferation of connected devices and Internet of Things (IoT) technology has provided a plethora of entry points for cybercriminals.

Existing cybersecurity strategies and toolsets were not equipped to handle the new way of working. This has resulted in the introduction of new security gaps and shortcomings.

The COVID-19 pandemic and stay-at-home orders accelerated the shift to remote work. This rapid change caught many organizations off guard, leaving them vulnerable to cyber threats.

Cyber insurance benefits are often overlooked, but they can be a game-changer in the event of a cyber attack. AIG's proactive approach to cyber security is a great example of this, as they notified the CISO about a cyber vulnerability, providing actionable information that was greatly appreciated.

This kind of proactive support can help prevent costly cyber attacks and minimize their impact when they do happen. AIG's efforts are a valuable part of what cyber insurance is going forward, as they demonstrate a commitment to helping businesses stay safe online.

Cyber insurance is more important than ever, especially with the rise of cyber threats. CrowdStrike's Falcon platform is designed to help clients reduce risk and improve their security standing.

The key to improving insurability lies in demonstrating comprehensive security coverage. CrowdStrike's platform includes Falcon Identity Protection, which focuses on real-time threat prevention and IT policy enforcement using behavioral and risk analytics.

Falcon Insight endpoint detection and response continuously monitors all endpoint activity, analyzing data in real time to automatically identify threat activity. This enables detection and prevention of advanced threats as they happen.

CrowdStrike's managed threat hunting service, Falcon Overwatch, provides deep and continuous human analysis, 24/7, to relentlessly hunt for anomalous or novel attacker tradecraft. This is particularly valuable for organizations that want to better qualify for cyber insurance.

CrowdStrike has a team dedicated to working with the cyber insurance community, comprised of experienced insurance professionals who previously underwrote and brokered cyber insurance. This team educates insurance underwriters and cyber insurance brokers on the value of CrowdStrike products and services.

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Here are some key benefits of using CrowdStrike's platform to improve insurability:

AIG Benefit is a valuable asset for businesses, as it provides timely and actionable information about cyber vulnerabilities. This was demonstrated when AIG notified the CISO about a cyber vulnerability, earning praise for its actionable information.

AIG's proactive approach to cyber threats is a key benefit of their cyber insurance. Their CyberEdge risk management approach provides coverage for physical and non-physical losses resulting from a cyber event.

AIG's CyberEdge policy or endorsed policies offer flexibility in coverage options. Coverage is available through a standalone CyberEdge policy or endorsed onto select Financial Lines, Property, and Casualty policies.

AIG's cyber insurance is designed to meet the unique needs of businesses. To find the best fit for your needs, you can refer to their cyber coverage guide, available as a PDF download.

AIG's Cyber Application provides more information on their cyber insurance offerings.

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Cyber insurance is a necessity for any digital business, especially in today's world where cyberattacks are on the rise.

Many small or mid-sized businesses assume their relative obscurity will protect them from cybercrime, but our analysts have found that cybercriminals often target these organizations because they lack robust cybersecurity measures.

Large and prominent organizations are also vulnerable to big game hunting, a type of cyberattack that usually involves ransomware to target high-value organizations or high-profile entities.

These attacks often result in significant costs for remediation, making cyber insurance a crucial investment for businesses of all sizes.

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Any digital business needs cyber insurance due to the increase in cyberattacks and high remediation costs.

Cybercriminals often target data, including PII, which can be used for fraud, secondary attacks, or sold on the dark web.

Small or mid-sized businesses are easy targets because they often lack robust cybersecurity measures.

Large and prominent organizations are vulnerable to big game hunting, a type of cyberattack that uses ransomware to target high-value organizations.

Big game hunting continues to be a security concern, with new adversaries and high-volume campaigns emerging.

The number of victims in big game hunting dedicated leak sites has increased due to new adversaries and high-volume campaigns.

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Cyber insurance is not just a nice-to-have, it's a must-have for any organization that wants to protect itself from the financial fallout of a cyber attack. Insurers are becoming more discerning about who they agree to take on as a client and how to calculate their premium.

To improve insurability, an organization's ability to demonstrate comprehensive security coverage is key. This is where CrowdStrike comes in. The CrowdStrike Falcon platform is designed to help clients reduce risk and improve their security standing.

CrowdStrike has a team dedicated to working with the cyber insurance community, comprised of experienced insurance professionals who previously underwrote and brokered cyber insurance. They spend their time educating insurance underwriters and cyber insurance brokers on the value of CrowdStrike products and services.

The CrowdStrike Falcon platform includes several modules that can help improve insurability, including Falcon Identity Protection, Falcon Insight, Falcon Prevent, Falcon Spotlight, and Falcon Overwatch. These modules provide real-time threat prevention and IT policy enforcement, continuous monitoring of endpoint activity, and real-time visibility across the enterprise.

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Here are some of the key features of each module:

By using the CrowdStrike Falcon platform, organizations can demonstrate comprehensive security coverage and improve their insurability. This can help them avoid significant premium increases or even qualify for cyber insurance in the first place.