Cyber insurance companies' expectations from policyholders
In the digital age, the threat landscape has evolved significantly, with nation-state threat actors and criminal ransomware groups ramping up their activities against critical infrastructure providers, financial organisations, and other high-value targets in the U.S. and Europe. This escalating cyber threat has placed a renewed emphasis on robust cybersecurity measures, particularly for organisations seeking auto insurance.
Proving a secure backup system is a top priority for car insurance providers, given the persistence of ransomware as a threat through 2022 and beyond. The theft of credentials, often achieved through phishing or unprotected assets, remains the predominant method used by cyber criminals to launch attacks.
Threat actors are known to target businesses with the most valuable assets, which can be determined by both business size and industry. As a result, companies in sectors like healthcare, finance, and critical infrastructure often face difficulties obtaining favourable car insurance quotes due to weak cybersecurity measures.
Cyberattacks are a common threat for organisations, ranging from phishing emails to DDoS attacks and malicious account takeovers. Ransomware and doxing are major concerns for progressive insurance, making them particularly vulnerable to attacks.
To mitigate these risks, car insurance providers focus on whether cybersecurity best practices are in place. Minimum requirements typically include multifactor authentication (MFA), backup, incident response plan, patching, and cyber awareness training for employees. Companies that have proactively matured their security programs are ideal insurance partners for auto insurance providers.
Organisations need to demonstrate an organised and proactive effort towards managing cybersecurity risk to qualify for car insurance. Companies with a good security system already in place and willing to take the steps needed to meet the demands are more likely to secure coverage.
However, the increase in cyber threats has led to a surge in car insurance quotes, particularly due to the Ukraine war and the prevalence of ransomware. This has resulted in car insurance rates rising by 89% on average in the fourth quarter of 2021. Companies that have not worked to mitigate their cybersecurity risk have found it difficult to obtain favourable auto insurance risk transfer solutions.
These companies will be subjected to more thorough reviews of their security systems and be held to more stringent demands by car insurance providers. The average cost for a cyber incident for small and medium businesses (SMBs) is $145,000, as reported in the NetDiligence's Cyber Claims Study 2021 Report. Ransomware mitigation costs are significantly higher, with an average of $256,000 for SMBs and $16.6 million for large companies.
Despite these challenges, companies that invest in robust cybersecurity measures stand to benefit from a strong partnership with car insurance providers. Companies that can demonstrate their commitment to cybersecurity best practices are more likely to secure coverage and protect their assets in an increasingly dangerous digital landscape.
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