<img height="1" width="1" style="display:none;" alt="" src="https://px.ads.linkedin.com/collect/?pid=1354242&amp;fmt=gif">

Handling Cyber Objections: 'Cyber Insurance Is Too Expensive'

General liability insurance is the most regularly purchased insurance policy among small businesses. It’s not hard to understand why — the risk of unruly equipment and product mishaps are both common and completely tangible.

That’s why cyber is tricky. It’s a newer risk that exists behind screens, not wet floor signs. So, with limited budgets, it’s often the first coverage to be deprioritized. 

But the financial and reputational repercussions from cyberattacks are just as real as property damage, and hurt businesses of all sizes. Below, we’ll help you make the “bang for your buck” case for any cyber-resistant clients.

No One Is Immune From Experiencing Cybercrime

Regardless of location, industry, or company size, any organization could be a threat actor’s perfect victim. While Healthcare, Tech, and Construction have held steady as the most targeted industries over the last few quarters, top targets ebb and flow depending on new exploitable vulnerabilities and cybercrime trends. 

Threat actors quickly pivot toward the most profitable direction. Over the past few years, they’ve proven (again and again) that they aren’t guided by a moral compass — just dollar signs. Attacks that significantly impacted the day-to-day lives of thousands of employees and customers, like Change Healthcare and Colonial Pipeline, brought million-dollar ransom payments to cybercriminals that leveraged dependencies on critical infrastructure for profit. 

But while these stories make big waves, they aren’t entirely relatable to a typical SMB. If anything, they validate the notion that they’re immune from cyber risk. 

The reality is that due to limited resources and security budgets, SMBs are actually a more common target than larger corporations. And industries with presumably less money to give aren’t safe, either — non-profits are regularly hit with the most severe attacks, seen as weak links in supply chains and treasure troves for potentially valuable data. 

Whether you’re a massive public company or a small business, the cybercriminal playbook is pretty consistent: prey on the negative consequences of business downtime. Plus, the criminal ecosystem has matured, creating efficiencies through specialization — as seen in the rise of “ransomware-as-a-service” offerings and negotiation specialists. Pulling off attacks is cheaper than ever, making smaller targets profitable.  

But even with a target on their back, 66% of small businesses are left vulnerable without cyber insurance, according to Travelers. 

Proactive insurance protects businesses

Organizations invest in insurance to transfer risk. With nearly three-quarters of U.S. small businesses reporting a cyber attack in 2023, that risk seems relatively high. 

Only 50.17% of companies report feeling prepared for a cyber incident. That’s why a modern approach to risk transfer matters. Instead of just paying a claim once the worst-case scenario lands at an organization’s doorstep, many cyber insurers prioritize a more proactive approach (like us at Corvus).

We work with policyholders throughout the entire policy period to flag cybersecurity blind-spots through threat monitoring, external scanning, and hands-on help from our in-house team of cyber experts. Not all businesses have dedicated resources for cybersecurity — and even the ones that do benefit from having a partner in cyber risk. 

Through our active threat monitoring program, we were able to prevent a full-fledged ransomware claim:

The situation: A third-party IT vendor fails to secure an access point in a professional services firm’s system
  • This allowed a threat actor to steal the company’s VPN credentials and post them for sale on the dark web

  • The Corvus team discovered the leak through our regular threat monitoring process, and contacted the policyholder and their broker within minutes 

The resolution: The firm heads off attackers and avoids a possible six-figure claim 
  • The ensuing investigation enabled the company’s IT team  to locate the compromised accounts and shut off access quickly

  • The policyholder experienced minimal impact to the business, avoiding what could have been a six-figure ransomware claim

 

Cyber incidents aren't cheap 

Rebounding from a cyber incident is more than paying (or not paying) a ransom. To help set the stage, let’s look at a typical recovery process from a cyber incident — and the potential losses from discovery to notification. 

An organization discovers a data breach 

  • Stop the spread, either with in-house IT staff or by hiring incident response teams
  • Hire a forensic firm to investigate how attackers breached systems and determine the extent of the spread
  • If malware was deployed, business operations may halt — leading to a loss of revenue

The recovery process begins

  • Hire legal teams to determine the notification process
  • Invest in the recovery and remediation of impacted systems
  • Determine next steps to prevent a repeat attack in the future
  • Decide if a ransom payment is necessary 

Long-lasting impact 

  • Losses from reputational harm 
  • Potential lawsuits
  • PR services to mend reputational damage 

All in all, the average data breach cost organizations around $4.45 million USD in 2023, according to IBM. Cyber coverage can play a crucial role in not only shouldering the costs but also setting organizations up with trusted vendors (like legal and forensic teams, often at a discounted rate), as well as providing experienced claims teams that get cyber. They walk impacted organizations through the entire recovery process to provide a clear picture of what’s next, at a time when the future can feel unpredictable. (You can read more about the coverages provided in standalone cyber here.)

Cybercrime isn’t slowing down and ransomware continues to break records every quarter. Unsurprisingly, 75% of businesses report security as an increasing priority. As organizations look to strengthen their defenses, cyber insurance may be the most practical next step for mitigating risk. 

Recent Articles

Handling Cyber Objections: 'Cyber Insurance Is Too Expensive'


Clients may be quick to object to the cost of cyber insurance, but we'll unpack the real 'bang for your buck' argument to cyber coverage.

CDK Global Incident | June 2024


A popular auto dealer software is experiencing a cyber incident. Here's what you need to know.

Cyber and Construction: Laying Groundwork to Combat Digital Threats


The construction sector is facing urgent cybersecurity challenges. Learn more about unique risks and how creative underwriting solutions can help.