Cyber insurance is like a safety net for your business in the digital world. It’s there to protect you from the unexpected, whether it’s a data breach, a cyberattack or even a ransomware attack. 

Just like you wouldn’t leave your home without locking the doors, cyber insurance ensures that your business is safeguarded against known and unknown threats. That’s why cyber insurance renewal should be a top priority, yet only 5 percent of small to medium businesses even have cyber insurance.

Is It Really Necessary to Renew Your Cyber Insurance Policy?

Obtaining and renewing cyber insurance is crucial because it ensures continuous protection against cyber threats. Just like how you’d renew your health insurance to maintain coverage for unexpected medical expenses, cyber insurance renewal safeguards your business against potential cyber risks.

Cyber threats are constantly evolving, with new tactics and techniques emerging all the time. By renewing your cyber insurance, you ensure that your business stays protected with the latest coverage and features tailored to address today’s current cyber risks.

Cyber insurance renewal is a proactive measure that is not only necessary for the safety of your business, but also needed to:

• Mitigate financial losses.
• Repair reputational damage.
• Cover legal liabilities.
• Demonstrate your commitment to cybersecurity. 
• Address emerging threats.

For all of these reasons and more, having cyber insurance is key to the safety and operation of your business. Additionally, you can instill confidence among your customers, partners and stakeholders by showcasing your business’s resilience against cyberattacks.

Key Challenges Businesses Face Without Cyber Insurance

According to research conducted by IBM, the average cost per data breach was $4.3 million in 2022. That’s up from $3.8 million in 2020. Aside from a major hit financially, the damage to your business from a cyberattack can be monumental. 

Some of the additional challenges businesses face when dealing with an attack include:

1. Reputational Damage

A cyber incident can severely damage a business’s reputation, eroding trust and confidence among customers, partners and stakeholders. Without cyber insurance to mitigate the impact, businesses may struggle to recover from reputational harm caused by data breaches, which can lead to loss of customers and market share.

2. Legal Liabilities

Small to medium businesses without cyber insurance may face legal liabilities arising from data breaches or noncompliance with data protection regulations. In the absence of insurance coverage, businesses may be held accountable for damages, settlements or regulatory fines, leading to costly legal proceedings and potential bankruptcy.

3. Operational Disruption

Cyber incidents can disrupt business operations, causing downtime, loss of productivity and interruption of critical services. Without cyber insurance to cover the costs of recovery and restoration, your organization could suffer through prolonged downtime, revenue loss and operational inefficiencies. Your ability to serve customers and meet business objectives would be at risk.

4. Limited Resources for Recovery

Small to medium businesses often lack the financial resources and expertise required to effectively respond to and recover from cyber incidents. Without cyber insurance to provide financial support and access to cyber incident response services, your business may struggle to recover data, restore systems and resume operations in a timely manner. Even worse? The impact of a cyberattack could be prolonged and overall damage to your business exacerbated.

Is Cyber Insurance Difficult to Obtain?

Cyber insurance companies require, as part of intense underwriting scrutiny, that applicants adhere to specific cybersecurity frameworks and have controls and audits in place to assure compliance. As a result, the application and approval process is taking much longer than ever before and premiums are on the rise.

But there are strategies your business can implement to not only obtain, but continuously renew your cyber insurance policy.

6 Strategies to Help You Prepare for Cyber Insurance Renewal

Cyber insurance providers require an organization to thoroughly and honestly assess its current risk exposure and potential vulnerabilities. The process will involve a lot of internal research to build a clear picture of cyber risks and how to manage them.

Generally, this information can be broken down into six key categories:

1. Cyber Risk Assessment

Conduct a thorough assessment of your organization’s cyber risks. This might include reviewing your existing cybersecurity measures, identifying potential vulnerabilities and evaluating the likelihood and potential impact of a cyber incident.

2. Asset Inventory

Insurers will want to know how prepared you are in the event of an attack or disaster. Having an updated inventory of all IT assets enables your organization to respond quickly and accurately to security incidents, minimizing potential damage and speeding up the response and recovery process. 

What assets need to be insured? Which are more valuable or critical to the safety and success of your business? Having this information at the ready will allow you to determine what type of coverage you need when renewing your policy. 

3. Incident Response Plan

Develop an incident response plan (IRP) for how your business will respond to a cyberattack or disaster. The plan should include steps for containing the incident, notifying stakeholders and remediating any damage. Having a comprehensive IRP will inform the insurer of how you will fare in case of a cyber incident. The measures you’ve taken to mitigate risks can directly influence whether or not you qualify for cyber insurance renewal.

4. Coverage Needs

Based on your assessment of your risks and incident response plan, determine the type of cyber insurance coverage you need. This might include coverage for data breaches, business interruption and other costs associated with a cyber incident. After that, evaluate policy options from different providers to determine which offers the best coverage for your business at a price that fits within your current budget.

5. Managed IT Services

Augmenting your organization with IT and cybersecurity consultants through a managed services provider (MSP) like Afidence is a smart business move when managing risks. Especially since insurers look at the quality and reputation of any third-party IT provider associated with your business. This information helps insurers gauge the type of damage your business might incur from a cyberattack. Insurers will want to know about all outsourced cyber activities and be provided with a list of all relevant IT providers, including documentation about how those contracts are written and managed.

6. Software Updates

Outdated software can create vulnerabilities in your organization that act as open doors for cybercriminals. We highly recommend only running current, vendor-supported operating systems that offer regularly scheduled updates, as well as testing available security patches and applying them to production systems based on the severity of the risk they mitigate.

Ready to Start Your Cyber Insurance Renewal Process?

At Afidence, we’re here to secure your enterprise and provide assistance with your cyber insurance renewal process. Contact us today.

And, if supplemental IT staffing is on your mind, remember that we are experts in providing personnel who can fill your hard-to-find and hard-to-keep positions. Reduce risk to your organization and save time and money by fortifying your team from top to bottom with technologists business leaders love working with.