5 ways to reduce your cyber insurance premium

Protecting your business from cyber threats has become a non-negotiable priority. Enter cyber insurance – an essential safeguard that shields businesses from the financial repercussions of cyber-attacks. 

However, the rising prevalence of cybercrimes has led to soaring premiums, leaving many organisations grappling with the costs. 

Fear not, as we unravel the secrets to unlocking lower cyber insurance premiums. In this insightful guide, we'll reveal top strategies that not only minimise your expenses but also fortify your cyber security posture.

The importance of cyber insurance

Cyber insurance provides a critical safety net, helping businesses manage the financial fallout of a cyberattack and recover with minimal disruption.

The cyber insurance market has grown exponentially in recent years, but Australian businesses have been slow to adopt these measures. Only 20% of SMEs and 35-70% of larger businesses have invested in cyber insurance, despite the reassurance it provides.

Cyber insurance policies typically cover costs associated with data breaches, ransomware attacks, business interruption, and other cyber events. As cyber threats become more sophisticated and pervasive, having the right insurance in place is essential to protect your business from the potentially crippling financial consequences of a cyber incident.

What are cyber insurance premiums?

Cyber insurance premiums are the cost that businesses pay to obtain coverage against cyber risks. These premiums are determined by insurance providers based on an assessment of the insured organisation's risk profile. The higher the perceived risk, the higher the premium. Premiums can vary widely depending on the size of the business, the industry it operates in, the nature of its digital assets, and its cyber security practices.

Factors affecting cyber insurance premiums

There are several factors that can influence the cost of cyber insurance premiums. These factors can be broadly categorised into three main areas: 

Risk profile: Insurers assess a range of factors to determine the likelihood of a cyber incident occurring and the potential financial impact. These factors include the size of the business, the industry it operates in, its digital footprint, and its existing cyber security measures.

Level of coverage: Businesses can choose from a range of coverage options, including data breach liability, business interruption, ransomware coverage, and more. The broader the coverage, the higher the premium.

Specific policy features: Different policies may offer varying levels of coverage, deductible amounts, and additional services, such as access to cyber security experts or legal support.

How to reduce your cyber insurance premium

1. Implement a cyber security framework

A cyber security framework is a set of guidelines and best practices designed to help organisations manage and reduce their cyber risk. By following a recognised framework, businesses can demonstrate to insurers that they have taken proactive steps to protect their digital assets and reduce their likelihood of experiencing a cyber incident.

The Australian Cyber Security Centre (ACSC) developed the Essential Eight Risk Mitigation Strategies as a baseline cyber security framework that businesses should implement to cover their basic security posture. Ranking high maturity with the Essential Eight can help to lower your insurance premium.

2. Employee cyber awareness training

Human error is one of the leading causes of cyber incidents, making employee cyber awareness training a critical component of any effective cyber security strategy. By providing employees with the knowledge and skills to recognise and prevent cyber threats, businesses can significantly reduce their risk of experiencing a cyber incident.

Insurance providers recognise the value of employee cyber awareness training and may offer premium discounts to organisations that have implemented robust training programs. Effective training programs should cover topics such as phishing, password security, social engineering, and what to do in the event of a breach.

3. Create an incident response plan

An incident response plan is a documented set of procedures that outlines the steps your business will take in the event of a cyber incident. This plan should detail the roles and responsibilities of key personnel, the procedures for detecting and containing a cyber incident, and the steps for recovering and restoring operations. 

Insurance providers value organisations that have a comprehensive incident response plan, as it demonstrates that the business is prepared to respond quickly and effectively to a cyber incident. This can help to minimise the financial and operational impact of a cyber event, reducing the potential payout for the insurer.

4. Have demonstrably secure backups

In the event of a cyber incident, such as a ransomware attack or data breach, backups can help your organisation quickly recover and restore its operations with minimal disruption. 

To qualify for lower cyber insurance premiums, businesses should ensure that their backups are stored securely and are easily accessible in the event of an incident. Backups should be regularly tested to ensure their integrity and completeness, and procedures should be in place to quickly restore operations using the backups.

5. Maintain compliance to industry standards

Ensuring compliance to regulatory and industry standards demonstrates that your organisation is taking the necessary steps to protect sensitive data and manage cyber risk.

To maintain compliance, regularly review your policies and procedures to ensure they are aligned with the latest regulatory requirements. Compliance training should be provided to employees to ensure they understand their responsibilities under the relevant regulations. Regular audits and assessments can also help to identify areas where improvements can be made to maintain compliance.

Implement the right cyber security framework and practices for your business

By taking a proactive approach to cyber security, your business will not only be protected from financial losses, but also demonstrate to insurers that cyber risk is being effectively managed. The cyber security specialists at Essential Tech can implement the right cyber security solutions for your business, and manage your environment for maximum effectiveness. This will help lower your cyber insurance premium and ensure business continuity in the event of an incident.