Earning Better Rates Through Security
Cyber insurance premiums have been rising significantly in recent years as the frequency and severity of cyberattacks escalate. However, businesses aren't powerless. Just as installing a security system can lower your home insurance, implementing strong cybersecurity controls can demonstrably reduce your cyber insurance premium.
Insurers reward businesses that proactively minimize risk. Here are the most effective strategies to lower your costs and improve your insurability.
1. Implement Multi-Factor Authentication (MFA)
If there is only one change you make, make it this. For many insurers, MFA is no longer just a way to get a discount—it is a strict requirement for coverage.
- What it is: MFA requires users to provide two or more verification factors to gain access to a resource (e.g., a password plus a code sent to a mobile phone).
- The Impact: It drastically reduces the success rate of attacks relying on stolen passwords and credential stuffing. Specifically, ensure MFA is enabled for all remote access (VPNs), email systems, and critical cloud applications.
2. Prioritize Data Encryption
- What it is: Scrambling data so it cannot be read without a decryption key.
- The Impact: Encrypt data both "at rest" (stored on servers or laptops) and "in transit" (moving across networks). If a laptop is stolen but the hard drive is encrypted, it is often not considered a reportable data breach because the data remains inaccessible. This significantly reduces your risk profile.
3. Maintain Robust and Segregated Backups
Ransomware is the biggest driver of cyber insurance claims. How you handle backups determines how resilient you are.
- The Strategy: Maintain regular, automated backups. Crucially, these backups must be kept separate from your primary network (e.g., in a segmented cloud environment or offline).
- The Impact: If your primary network is encrypted by ransomware, segregated backups allow you to restore functionality without paying the ransom, drastically reducing the potential claim size.
4. Conduct Regular Employee Training
Your technology is only as strong as its weakest human link.
- The Strategy: Implement ongoing security awareness training focused on identifying phishing emails, social engineering tactics, and poor password hygiene. Couple this with simulated phishing tests.
- The Impact: Demonstrating a "culture of security" assures underwriters that you are actively managing human risk.
5. Establish an Incident Response Plan (IRP)
- What it is: A formal, documented plan outlining exactly what the company will do in the event of a breach (who to call, how to contain it, legal obligations).
- The Impact: A well-rehearsed IRP means you act quickly during a crisis, mitigating damage and costs. Insurers view this as a hallmark of organizational maturity.
Conclusion
Investing in cybersecurity is not just a technical necessity; it’s a financial strategy. By adopting these controls, businesses not only protect their assets but also present themselves as highly desirable, low-risk clients to insurance underwriters.
See the impact of security controls firsthand. Estimate your premium now with our calculator.