More Companies Will Be Denied for Cyber Liability Insurance in 2022 than Ever Before—Here’s How to Prepare

Cyber liability insurance (also known as cybersecurity insurance or cyber insurance) is soaring in popularity. Why? Businesses are being hit by ransomware and other cybercrimes at unprecedented rates, and we’re hearing about it! At this point, most business owners know someone who has been hit by a pricey cyberattack.

That’s not to mention those who have already suffered through a cybersecurity breach—once you’ve been hit, you’re going to do whatever you can to avoid it again. Cyber insurance should be thought of as another part of your disaster recovery plan. A cybersecurity policy can be the difference between shutting your doors and staying in business.

New numbers came out this autumn citing a significant uptick in cybersecurity insurance denials for 2022. As ransomware payments skyrocket, insurance providers are asking clients to prove their cybersecurity readiness and preparedness before approving a policy.

Why is it harder to get approved for cyber insurance in 2022?

Cybercrime is a big business, and as a crime, difficult to bring to justice. Most cybercriminals are located offshore, targeting U.S. consumers and businesses from across the world. They form syndicates and groups, and reorganize if necessary. It’s hard to hit a moving target.

At this point, cybercriminals are “winning” the game. The U.S. is desperate for cybersecurity experts and professionals and is having a tough time finding them.

Large insurance companies know that these crimes will continue to worsen over the next year. The premiums they charge cover the costs of ransomware and downtime payouts and allow them to take a profit, and these costs are rising as ransom sums reach record numbers.

In response to this, insurance companies are becoming more selective in who they bring on as clients. Questionnaires are getting tougher, as are the criteria for a payment in the event of a breach. Business owners must prepare accordingly.

Should you lie on a cyber insurance questionnaire? Should you stretch the truth?

In short, no.

If you lie on your application, you won’t get a payout in the event of a disaster, so you will be paying for nothing. Insurance providers investigate claims to make sure that all the proper security defenses were in place at the time of the event, and if they were not, they are not under obligation to pay out.

If you are caught, you also have a chance of being denied for coverage outright.

What do you need to do to be approved for cyber insurance?

The good news is that insurance providers publish requirements for cyber policies. Your insurance broker might refer you to a security expert such as Facet to ensure that you have the required security stack in place to get cyber insurance.

Most insurers will require a questionnaire to be filled out by your internal IT department or your IT provider. This questionnaire covers things like your network environment, firewalls, antivirus protection, MDR (managed detection and response, if applicable), multi-factor authentication, email security and filter, employee training and education, and backups. They may also ask if your security team is in-house or outsourced. There may be more categories or less depending on the insurer.

If you are working on an outdated network with poor security, you may not be approved for cyber insurance. More importantly, you may be leaving your company open to hackers and other cyber threats.

You can fight this with a great security stack and trusted advisors to keep your company protected. At Facet, we are constantly updating our offerings to fit the needs of our customers and keep them safe. Our strategies are at the forefront of the cybersecurity landscape.

We work with many clients to ready them for cyber insurance policies. If you have any questions about how we can help you develop a secure environment and a disaster recovery plan, contact us today to learn more.

We also offer a weekly cybersecurity tip email that goes straight to your inbox! Just fill out our contact form and let us know you’d like the weekly tips.