The landscape of cyber threats has significantly expanded in terms of volume, complexity, and impact of attacks over the past few years. Consequently, regardless of their size, industry, or geographic location, the vast majority of companies prioritize protection against these threats and primarily strive to implement robust cyber defense measures to counteract them.
However, given the difficulty of preventing and anticipating all current and future forms of threats, especially the methods attackers use to bypass defenses and introduce ransomware into a system, organizations worldwide also tend to adopt cyber insurance policies to safeguard their operations in the event of a successful intrusion. According to the State of Ransomware 2023 Study conducted by Sophos in early 2023, 91% of global companies have some form of cyber insurance.
If 47% of companies declare having subscribed to an independent insurance policy, and 43% have opted for insurance integrated into broader coverage, independent and integrated cyber policies are the two main types in the market. It is crucial for companies to choose coverage that aligns with their specific needs and risks, ensuring the best possible protection for their data and operations.
Before subscribing to insurance, conducting an audit of existing solutions is essential, questioning whether they benefit from top-notch first-line cybersecurity protection. Indeed, this can impact their access to cyber insurance and the selection of a policy that best suits their particular needs.
The quality of cyber defenses significantly influences corporate coverage. First-line cybersecurity measures can notably affect the adoption and choice of a cyber insurance policy for companies. According to the aforementioned study, 95% of respondents specifically cite that the quality of implemented cyber defenses has a direct impact on the insurance they subscribe to, affecting both the cost and terms of the policy, ensuring access to the coverage that suits them best.”
“According to the study, 60% of organizations with cyber insurance state that the quality of their existing defenses influenced their ability to secure coverage. Furthermore, 62% mention its impact on the policy’s cost, and 28% note its effect on insurance contract terms. Ensuring the most comprehensive and robust protection layer is essential to save money and select insurance that best meets the business’s requirements.
Interestingly, cybersecurity measures play a more significant role in obtaining independent cyber insurance compared to integrated coverage. 71% of those with independent policies note that the quality of their protection influenced their coverage, while only 49% of those with integrated policies believe it impacted their ability to contract cyber insurance. Conversely, the performance of security measures has a greater influence on the cost of integrated policies [67%] than independent insurance [58%].
Therefore, companies should prioritize assessing the effectiveness and robustness of their cybersecurity solutions before seeking cyber insurance tailored to their needs. This approach enables them to select the most appropriate policy and negotiate favorable costs and terms.”
The Importance of Cyber Insurance in Protecting Against Ransomware
The primary threat facing businesses today has a name: ransomware. This type of malicious software, designed to encrypt and steal organizational data, followed by a ransom demand, has become the top concern for Chief Information Security Officers [CISOs] in recent years.
Given that its introduction into a system can result from highly varied, often unpredictable, and constantly evolving tactics, techniques, and procedures [TTP], it is impossible to guarantee that a company will not experience a successful intrusion. Hence, it is crucial for organizations to have, in addition to traditional cybersecurity solutions, a tailored cyber insurance policy that allows them to protect against data encryption, theft, or deletion.
In the event of data encryption, companies with the support and assistance of their insurer during the data recovery process, and those who, to qualify for insurance, have implemented enhanced security measures such as secure backups or incident response plans, are more likely to recover their encrypted data. According to the study, 98% of those with independent cyber insurance successfully restored their encrypted data, compared to 97% for those with integrated coverage, and only 84% for those without insurance.
It’s worth highlighting that beneficiaries of cyber insurance are more inclined to pay the ransom to retrieve their data. Thus, 58% of independent policyholders who fell victim.
In conclusion, while cyber insurance is now an essential element of business protection, it is inseparable from the quality of solutions and security measures taken to safeguard information systems and organizational data. It is crucial for global stakeholders, regardless of their industry, to ensure they have the most comprehensive, robust, and effective first-line protection to best guard against ransomware attacks and all other types of threats.
It’s also noteworthy that some managed cybersecurity solution providers offer complementary insurance guarantees in the event of a successful attack to further strengthen business protection. These aspects only reinforce the quasi-symbiotic relationship between cyber insurance and cybersecurity solutions.
By Prish Thakkar, Regional Director, East Africa, Sophos