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3 Reasons Why Insurance Agencies Are Rewriting the Rules on Cybersecurity

Andrew Koon discusses why cybersecurity insurance agencies are rewriting the rules

3 Reasons Why Insurance Agencies Are Rewriting the Rules on Cybersecurity

Andrew Koon, Advanced Business Solutions

It wasn’t that long ago that cybersecurity insurance was more of a precaution than a necessity. As a result, these insurance agencies were making money and keeping it. Large payouts for cybersecurity breaches were rare and not significant enough to break the bank.

Fast forward to today and insurance agencies are facing financial payout after financial payout. Because of this, they’ve decided it’s time to rewrite the rules. If your business fails to follow their guidelines on cybersecurity, you might lose your coverage when you need it most.

  1. Without Certain Security Measures in Place Cybersecurity Breaches Are Not a Matter of “If”, but of “When”

Studies predict that ransomware damages will hit $20 billion in 2021. In 2015, total damages from ransomware were below a million! Needless to say, insurance companies can’t afford to foot the bill on these damages. As a result, basic cybersecurity measures like Multi-Factor Authentication will be required by insurance agencies in order for a business to be insured.

  1. More and More Businesses Are Investing in Cybersecurity Insurance

60 percent of small businesses close within six months of being hacked. Additionally, small businesses are targeted by hackers BECAUSE their security is easier to breach. In order to combat this, more and more small businesses are investing in cybersecurity insurance. In order to better protect these businesses and themselves, insurance agencies who are making security requirements are becoming more common and elaborate. 

  1. The Lack of Security Requirements is Hindering Business Growth

Businesses are facing the challenge of protecting their clients’ data as much as they are their own. Insurance agencies can’t be responsible for the data of their clients AND their clients’ clients! Legal requirements, which affect hospitals, insurance agencies, and law offices more than anyone, are making it difficult to do business without proper security measures in place. If your business isn’t protected, your business isn’t the only data source at risk. For most professionals, trust is an important part of the client relationship. Businesses are losing clients and sales because they can’t promise the security requirements necessary to keep/win their business!

What Do These New “Rules” Mean for You & Your Business?

The biggest issue you should be aware of is that even if you’re paying for cybersecurity insurance, you might not be insured.

It’s important that you understand the terms of your insurance. If your business does not comply with the terms your insurance company requires, you may not be eligible for the very insurance you’re paying for!

Check your policy, contact your agent, and make changes.

The last thing we’ll share is this: Insurance or no insurance, protecting your business and your clients matters! Even if you have insurance, you don’t want to have to use it. By following their guidelines and investing in proper cybersecurity best practices, you can protect yourself, your business, and your clients from a very frustrating and costly security breach. Remember – without basic security measures in place, it’s not a matter of “if”, but “when”.

As always, let us know if you have any questions or would like to learn more about securing your business. We’re here to help!