As our world depends more on digital technology, businesses face ever-evolving cyber threats that can jeopardize their sensitive data, financial stability, and reputation. As a bank owner or IT manager, you understand the critical need for robust cybersecurity measures to protect your organization. But what happens when that isn’t enough? Maybe the hackers penetrate your firewall, or your passwords get sold on the dark web. It’s almost not a question of if a cyberattack will happen but a question of when one will happen.
That’s why more banks are turning to cyber insurance. Cyber insurance is an option that can help protect your business against losses resulting from a cyber attack. But to get cyber insurance, you need certain security measures in place, like endpoint detection and response, multi-factor authentication, and offsite encrypted backups. Not sure if you have them or if they are up to snuff to complete your insurance application? Get in touch with us at ImageQuest today, and we’ll help ensure your cybersecurity is the best it can be.
What Is Cyber Insurance?
You may have heard about cyber insurance when it comes to safeguarding your financial institution against ever-increasing cyber threats. Your examiner may be asking you if your bank has it. But what exactly is cyber insurance? In simple terms, cyber insurance is specialized insurance coverage designed to protect your business from the financial losses and liabilities that can arise from cyber incidents.
Imagine this scenario: A malicious hacker breaches your bank’s network and steals sensitive customer data or money. Not only will you face potential legal claims and regulatory fines, but you may also experience significant reputational damage. This situation is where cyber insurance comes into play. It provides coverage for expenses such as legal fees, forensic investigations, customer notification, and even public relations efforts to restore your bank’s reputation.
Do I Need Cyber Insurance for My Financial Institution?
Considering that the average cost of a data breach in 2023 was $4 million, having cyber insurance is crucial for businesses of all types and sizes. However, let’s be clear that just because you have a cyber insurance policy doesn’t mean you’re completely covered in the event of a cyber incident. It’s important to set money aside for these instances because chances are there is at least one exclusion in your policy that will either void your coverage or you’ll have a related expense that won’t be covered, according to Delinea’s 2023 State of Cyber Insurance Report.
But even though your cyber insurance policy might not cover every associated data breach cost, you still need it. Delinea reported that companies with cyber insurance use it at least once, but usually more than once. Furthermore, more than half of smaller companies have used their coverage multiple times.
This fact is further proven by Gallagher’s 2024 Cyber Insurance Market Conditions Outlook, which states that you can expect to see an increase in ransomware incidents in 2024. There is also a trend of double extortion going around where threat actors encrypt and exfiltrate their victim’s data with the threat of exposing it unless the extortion is paid. Without cyber insurance, your financial institution could be on the hook for all of these expenses, not just some.
How Do I Get Cyber Insurance for My Bank?
Now that we have a basic understanding of cyber insurance and why it’s important, let’s dive into getting cyber insurance. A cyber insurance company will want you to complete an application that determines how risky it is to provide this service. If you have too many cybersecurity weaknesses that could impact your organization, you may get rejected. If this situation happens, don’t navigate the journey alone. Get in touch with us, and we can help you get your cybersecurity program on track.
Why Do I Need to Have Better Cybersecurity Practices?
Cyber insurance companies want to know how vulnerable you are to security breaches. The higher your chances of getting attacked, the more it will cost to insure you, and thus, the higher premiums you’ll pay.
Insurers are becoming more cautious and imposing limits, exclusions, and tighter policy language to manage their own risks and costs. That’s why they are pushing organizations to get third-party cybersecurity help so that they can lower their risk with better cybersecurity solutions. Cybercriminals are constantly devising new ways to exploit vulnerabilities in technology, making it crucial for financial institutions to stay ahead of the game.
What Requirements Does a Cyber Insurance Company Look at?
As the complexity and frequency of cyber attacks increase, cyber insurance requirements are becoming more stringent. Cyber insurance companies require better security controls before granting coverage, such as specific security controls, regularly updating software and systems, providing employee cyber training, and following compliance procedures. Other access controls required include:
- Identity and access management (IAM)
- Privileged access management (PAM)
- Password complexity and rotation
- Multi-factor authentication (MFA)
- Privileged session monitoring & recording
- Removal/reduction of admin rights
Why Can’t I Improve My Cybersecurity on My Own?
While it is possible to improve your cybersecurity internally, many financial institutions enlist the help of cybersecurity experts like ImageQuest. Why? A professional brings an unbiased perspective and specialized expertise to the table, helping you get the cyber insurance you need. ImageQuest’s cybersecurity and compliance team of experienced professionals can thoroughly evaluate your IT infrastructure, identify potential vulnerabilities, and provide recommendations tailored to your business’s specific needs. Leveraging our technical knowledge and industry experience ensures no stone is left unturned in assessing your cybersecurity posture.
In addition, we can help you answer the questions on your cyber insurance application and provide the required evidence. Some of the questions you will likely be asked include:
- Do you have a security management plan?
- Do you have documented security policies?
- Do you require employees to complete security awareness training?
- Have you performed an assessment?
- Do you have a cyber incident response plan?
- Do you have a disaster recovery plan?
- Do you have a vendor management plan?
- Do you perform vulnerability scans?
- Do you perform penetration tests?
- What type of data do you store?
- How many records?
As we mentioned earlier, with ransomware events on the rise, many cyber insurance companies are adding a ransomware supplement with additional questions, such as:
- Are backups air-gapped?
- Do you have an Advanced Endpoint Detection & Response (EDR), like SentinelOne, implemented?
- Are you using MFA for cloud applications?
- Are you using MFA for remote access (VPN) to network?
- Are you using MFA for email? (Insurers simply won’t insure you if you are not using MFA for email.)
- Are you using MFA for access to backups?
- Are you using MFA for privileged and administrative access?
- Are you using MFA for access to network infrastructure?
If you or your team doesn’t know the answer to these questions, get in touch with us now to get started on your cyber insurance application assistance.
How Do I Shop for Cyber Insurance?
When it comes to selecting the right cyber insurance policy, it’s crucial to consider your unique needs as a financial institution.
Start by evaluating the scope of coverage offered by different insurers. Look for policies that provide comprehensive protection against a wide range of cyber threats, including data breaches, ransomware attacks, and business interruption. Pay close attention to policy terms, conditions, and exclusions to ensure that you are fully aware of what is covered and what is not.
The amount of coverage you need is dependent on the type and amount of sensitive information your company stores. For example, a healthcare provider with PHI will need more extensive coverage than some non-profits. Your rates are also dependent on your security management plan, and without one, you could be denied or pay higher rates.
Other things to consider with your insurance policy, according to Gallagher, include terms related to war and systemic risk, regulatory coverage, and wrongful data collection:
- War and systemic risk are excluded from most cyber insurance policies. Pay close attention to wording about war, the level of harm in a scenario, official declarations of war, and wording that may impact coverage, even if you’re not directly involved in a conflict.
- Regulatory coverage is becoming more restrictive due to rising claims costs from regulatory bodies.
- Exclusions for wrongful data collection, specifically related to website tracking and privacy laws, are also being introduced.
Organizations should understand their policy inclusions, exclusions, and mandates to avoid claim denials, focus on building robust cybersecurity programs, train employees effectively, and mitigate insider threats.
Additionally, consider the reputation and financial stability of the insurer. Look for companies with a track record of promptly handling claims and providing exceptional customer service. Don’t hesitate to seek guidance from professionals like ImageQuest, who can help you navigate the complexities of cyber insurance applications.
How Can I Get Better Premiums on My Cyber Insurance?
As a financial institution owner, seeking ways to manage costs while obtaining adequate cyber insurance coverage is natural. Here are a few strategies to help you secure better premiums:
- Implement Strong Cybersecurity Measures: Insurers often offer more competitive rates to businesses that demonstrate robust cybersecurity practices. Investing in security measures such as firewalls, intrusion detection systems, and employee training can reduce the likelihood of cyber incidents and potentially lower your premiums.
- Regularly Update and Patch Systems: Keeping your software, operating systems, and applications up to date is crucial for maintaining a strong security posture. Regular updates and system patching help address vulnerabilities and minimize potential breaches, which insurers appreciate.
- Partner with a Trusted IT Provider: Collaborating with an IT provider like ImageQuest can significantly improve your cybersecurity posture. Our expertise and proactive approach can help prevent incidents and demonstrate to insurers that you take cybersecurity seriously.
By adopting these practices and working closely with our experts, you can enhance your cybersecurity resilience and potentially negotiate better premiums for your cyber insurance coverage.
Call Today for Help with Your Cyber Security Application!
The ever-evolving landscape of cyber threats poses a significant challenge for businesses today. The potential consequences of a cyber breach, from financial losses and legal claims to damaged reputations, can leave financial institution owners feeling overwhelmed and uncertain about the best course of action. We understand the frustrations and emotions that come with these challenges.
However, by investing in robust cyber security measures, you can proactively identify and address potential cyber threats. We can also help develop a targeted risk management strategy, ensuring that your business is well-prepared to navigate the complexities of cybersecurity.
At ImageQuest, we specialize in providing managed IT services, IT compliance, and security solutions to businesses like yours. Our team of experts is equipped with the technical knowledge and industry experience necessary to guide you through the intricacies of cyber insurance applications. Don’t wait until it’s too late—take action today and call us for help bolstering your cybersecurity defenses. Together, we can ensure that your organization is well-prepared to navigate the complex world of cybersecurity and safeguard your valuable assets.
Resources:
- https://www.business.com/insurance/cyber-insurance–assessment/
- https://delinea.com/resources/cyber-insurance-report-2023
- https://www.ajg.com/us/news-and-insights/2024/jan/2024-cyber-insurance-market-conditions-outlook/
- https://www.ftc.gov/business-guidance/small-businesses/cybersecurity/cyber-insurance