Small Business Owners, Beware. Your Cyber Insurance Rates are About To Go Up
The past few years have not been kind to insurance carriers. Between the pandemic, record-breaking numbers of natural catastrophes, and the surge in cybercrime and ransomware attacks, many insurance carriers reached (or surpassed) a tipping point.
According to insurance experts, cybercrime is of the upmost concern. Cybercrime related claims, including ransomware, went up 100% in 2020 (from 2019). Average pricing for cyber insurance was already on the rise, with rates increasing by 5-10% from 2019-2020, but according to the report, those rate increases were not enough to compensate for the number of incidents and the overall severity of those cases. E&O/Cyber pricing is expected to rise 20-50% throughout 2021.
To compensate, insurers are “reviewing areas in their portfolios where underwriting action is needed, and reevaluating capacity deployment.”
What does this mean for small businesses who aren’t up to snuff on insurance lingo?
To find out, we turned to our Director of Sales, Scott Barlow, who sold insurance for 10 years prior to joining Louisville Geek.
“This likely means insurance companies will start tightening the requirements to even be eligible to purchase cyber policies,” he said. “Expect them to require onsite and cloud data backups, disaster recovery plans, network and end-point security solutions to be in-place prior to being offered coverage.”
While price increases in 2021 are inevitable, the SolarWinds compromise has prompted insurers to review their terms and conditions of coverages. The extent of coverage provided for business interruption losses is being reviewed by several insurers. While it’s still unclear how this will play out, it’s clear that small businesses will be required to meet certain standards to qualify for certain packages.