Should small businesses be worried about the coming rise in cyber insurance premiums in 2022?
I think small businesses should be more worried that they will be uninsurable for cyber risk when renewals come up in 2022.
According to a small business survey from the middle of 2021, 47% of small businesses say that they have no understanding of how to protect themselves against cyber attacks.
As the article published in “Insurance Business Magazine” on December 7, 2021, this article speculates, with the increase in cyber losses resulting from poor management and understanding of basic cyber hygiene, the insurance industry deems most small businesses too risky to provide cyber insurance.
One maximum that holds true is over the years, insurance companies do not lose money. They adjust rates and premiums, lay off risk, and cut customers that fail to take basic precautions to keep themselves safe. This holds true for both physical as well as virtual risks.
Why is this even more worrying? Many customers or prospects that I speak with about their cyber security risks and potential vulnerabilities wave their hands and say “I have cyber insurance. My policy will cover me.”
My recommendation to all customers and companies that I speak in front of is to get their cyber house in order. No steps can prevent all attacks or all problems. What business owners can do is mitigate their risk and show that they are working within best practices to keep themselves and their customer’s data safe.
Some simple things to look at:
- Implement Multi-Factor Authentication on any web-based service.
- Have a plan to keep employees trained – and follow through on it.
- Do regular backups, hip them offsite and test those backups to ensure that they work.
- Get a cyber risk assessment done to know where you are vulnerable – then put together a plan to correct the areas of deficiency.
This is a long-term war that will not be won in a single battle. We have to be prepared to treat it that way.
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