RSM US LLP
Cyber Insurance Trends and Best Practices: An Evolving Landscape
August 26, 2022
ARTICLE | July 26, 2021
Authored by RSM US LLP
With cybersecurity attack attempts and successful breaches surging, cyber insurance has never been more valuable to middle market companies. However, the cyber insurance landscape is changing as long-standing risks increase and new ones emerge. In the past, cyber insurance was relatively inexpensive, but the increase in attacks—especially ransomware—has drastically changed policy requirements while also increasing costs.
The current cyber insurance environment
Unfortunately, we are seeing attacks in every industry, and the financial demands are getting much higher. Criminals know that more companies are buying cyber insurance, and this has made them even bolder—if they have insight into what a policy covers, they will ask for a ransom that the insurance company will cover. The odds of a security incident having a major impact on your business have increased—this has made providers more nervous about the coverages they offer and has led to some fairly significant changes.
Some of the more recent, important changes in the cyber insurance marketplace include:
- Reduced capacity: Insurance carriers are not comfortable with giving as much coverage, because they know there is a higher probability of having to pay out that amount.
- Rate increases: We are seeing a 25% to 100% increase in rates to account for higher, more frequent losses.
- Underwriting scrutiny: Underwriters have gone from asking very little about an organization to basically wanting to be a part of your IT team. They are asking more questions about controls, and if they deem you high risk, they may not offer you coverage.
Simply applying for cyber insurance has become more involved. Insurance companies have enhanced their application questionnaires to understand whether a company is at risk for ransomware and various other types of cyberattacks. Carriers use these yes/no questionnaires to score applicants and set insurance rates, as well as determine whether they will offer a policy at all.
These questionnaires are a critical part of the insurance process, and you need to fill them out as accurately and completely as possible to ensure you don’t compromise your rates or eligibility for coverage. The number of “no” answers you give could disqualify you for coverage—so thorough assessment of your risks before you apply is critical.
This article was written by Matt Franko and originally appeared on 2021-07-26.
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Hylant is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.
For more information on how Hylant can assist you, please call 800-249-5268.
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