How much does ransomware insurance cost?
An increasing number of organisations are using ransomware insurance to reduce their financial risk as a result of the rise in cyber threats in the past few years. One of your initial concerns when considering cyber insurance may be the price and whether it is worth it, particularly if your business’s size is small.
The annual cost of ransomware insurance for small enterprises can vary from $1,000 to $7,500. In small businesses with fewer than fifty people, the average cost of a cybersecurity event ranges from $8,000 to $12,000, with the potential to reach $300,000.
According to a study that used rate filings and quote estimates from more than 43 insurance companies in the country, cyber insurance premiums, based on businesses with moderate risks, ranged from $650 to $2,357. These rates were determined by taking into account a $10,000 deductible, $1,000,000 in company revenue, and $1,000,000 in liability limits.
In the United States, the average cost of cyber insurance has increased to 25–80%. The cost of protecting your company from hacking and data breaches varies according to the size and kind of the enterprise as well as the state in which it is situated. For instance, the average cost for our example situation in Michigan was $1,339, whereas the average cost in Minnesota for comparable coverage was $1,708.
Factors Influencing the cost of Ransomware insurance
Your business’s location is not the only thing that might have a big impact on the ransomware insurance premiums you pay. The types of security defences your business has implemented, the amount of sensitive employee and customer records you retain, if your firm stores credit card and banking information on your customers, and the nature of your organisation will all be considered by insurance carriers. Furthermore, your premiums can be higher if your business has a history of filing ransomware insurance claims or if it has previously been the target of an attack or breach.
- Enterprise Size: Due to their larger online profiles, greater customer databases, and abundance of digital assets, larger firms are often more vulnerable to cyber threats. Because of the possibility of a higher reward, cybercriminals may find a larger company to be a more tempting target. Furthermore, new vulnerabilities may be introduced by larger IT infrastructures due to their complexity. They consequently frequently pay greater premiums.
- Type of Industry: Companies in high-risk sectors, such as e-commerce, manufacturing, healthcare, and finance, frequently provide higher salaries. They are easy targets because they deal with a lot of sensitive data. For example, the extensive personal information found in healthcare records makes them highly valuable on the illicit market. Financial institutions are attractive targets for cybercriminals due to their direct access to monetary assets.
- Amount of Coverage: The price will be directly impacted by the level of coverage you choose. As with any other insurance, your costs will increase in proportion to the level of protection you choose. The cost of the policy will increase if a company needs coverage for things like business disruption, cyber extortion, regulatory fines, and data breach charges. Premiums are higher for more extensive coverage.
- Security Standards: Companies may qualify for reduced rates if they have competent cybersecurity procedures in place. Adequate security protocols lower the chance of a cyber event happening in the first place. Businesses with stronger security policies are frequently viewed by insurers as more secure. A proactive approach to reducing cyber dangers, for example, would be demonstrated by a corporation that frequently does penetration testing, keeps its firewalls and antivirus software updated, and offers cybersecurity training to its staff. Because these businesses are less likely to file claims, insurers tend to give them better deals. Some insurance companies won’t cover you if you don’t follow the basic security procedures.
Ransomware coverage expenses?
The process of figuring out how much coverage you need is complicated and should be customised to your unique business requirements.
- Valuation of Electronic Resources: Make a list of all of your data-related assets and calculate the approximate cost of recovering them. Databases, confidential software, financial data, intellectual property, and more are examples of digital assets. This data ought to allow you to order it in order of importance to your ability to carry out business. The amount of coverage you require will rise in proportion to how important the data is and how quickly it needs to be recovered.
- Substantial Earnings Loss: Unexpected disruptions to the system may result in earnings falling. You can estimate how much coverage you’ll need by performing some basic arithmetic on your daily lost income.
- Legal and PR Expenses: Take into account the possible legal bills and PR costs that can result from a cyber incident. For instance, you might require legal representation in any lawsuits resulting from data extraction or breach of contract. Additionally, you might need to work with an outside public relations agency if you lack the internal resources to handle a PR crisis or notify all of your impacted clients. The right amount of coverage for your company can be determined with the help of an insurance expert who specialises in cyber insurance.
Deductibles: How does it influence the cost of ransomware insurance?
The maximum loss that your business will bear in the case of a covered hack, data breach, or other incident covered by your cyber liability insurance is known as your cyber insurance deductible. A $1 million policy could typically have a $10,000 deductible, but you can select a greater or lesser deductible based on the needs of your business.
If you select a lower deductible, your premiums will increase even if you pay less in the event of a breach. You should take into account the effect a loss would have on your company as well as the maximum amount of damages you might be able to bear in the case of a breach or cyber incident when determining your deductible.
What is the impact of business type and size on insurance costs?
Numerous insurance providers base their insurance premiums on a company’s revenue. In general, premiums for a company with higher revenues will be higher than those for a similar company with lower revenues. A few insurance providers base a company’s rate on the number of employees; the more employees, the higher the price.
A company’s business type has a significant influence on the premiums it pays, in addition to its size. Depending on the nature of the business, the majority of insurance companies divide their clients into multiple premium classes. The lowest rates for insurance are typically found in companies with few data records and little storage of third-party information. In the event of a data breach, for instance, relatively little customer information would be impacted for a small manufacturing company with a limited customer base. However, a law business that keeps private client information would need extra cyber insurance.
The cost of insurance varies as well, depending on how much coverage the organisation needs. The premium will increase with the amount of coverage a corporation purchases. A business that buys $5 million in insurance, for instance, will pay a greater premium than one that just buys $1 million.
It is advisable to obtain quotations from a few different insurance providers in order to have a precise understanding of how business size and type impact insurance costs. When choosing an insurance policy, it’s critical to examine costs and coverage, as these might differ significantly among insurers.
What impact do security measures have on the price of insurance?
Many insurance providers will request that you perform an evaluation of the security measures currently in place at your business when you apply for insurance. The more security measures your business has implemented, the more economical the insurance premiums will be.
Your business could implement data loss prevention techniques, multi-factor authentication, hardware and software network security, encryption, and other security measures. Insurance companies are also curious about whether your business regularly updates software vulnerabilities and whether it outsources security audits and evaluations to outside parties. Encrypting data and keeping an eye on vendors that have access to your computers and data systems are further actions your business could take.
Ways to reduce the cost of ransomware insurance
- Strengthen Protection Safeguards: You may reduce your risk profile and, in turn, your premiums by putting effective safety precautions in place like firewalls, encryption, and multi-factor authentication.
- Workforce Training: Another way to lower the chance of human error is to teach your staff members the value of security as well as appropriate techniques. Employee education is essential since human error accounts for 95% of cybersecurity problems, according to the World Economic Forum. Phishing scams continue to be a useful weapon for cybercriminals, particularly when they target valuable targets such as executives. A crucial component of your security is knowing how to spot and report them.
- Periodical Vulnerability Evaluations: You may show your insurance company that you are managing risks proactively by doing regular security risk assessments and sharing the results with them. This could result in a reduction in your premiums. Third-party risk assessments demonstrate that you take security seriously, offer an unbiased viewpoint from an industry expert, and point out areas that need improvement.
- Analyze and boost your degree of technological competence. Investing in technology development can safeguard the company you have worked so hard to establish and improve the customer experience. IT is the people, technologies, and processes that come together to fulfil the objectives and overcome the difficulties of your business. It is more than just technology and software. Try out our Online Technology Literacy Self-Assessment to find out how you compare and where you can improve. After that, you can schedule a brief phone conversation to go over your findings, if you’d like.
Ransomware-attacking groups are never to be trusted, even though they may offer total system recovery in exchange for a ransom. Never promote a ransom payment. The FBI’s instructions for responding to ransomware are directly violated by doing this. In addition to implementing a data backup solution, the following top defence tactics will help you further prove that you are resistant to ransomware attacks:
- Update all security programmes, including antivirus software.
- Update all software programmes with the most recent security updates.
- Keep an eye out for any data breaches that can allow unauthorised users to access your network.
- Create a business continuity plan that describes how to recover from a ransomware attack.
Top Ransomware insurance companies in the US
- Hiscox
- Chubb
- The Hartford
- CNA
- AIG
- AXA XL