How to Reduce Your Cybersecurity Insurance Cost

A decade ago, cybersecurity insurance was rare. Today, it’s one of the fastest-growing industries in the world. In 2020, the industry was worth $7.8 billion. By 2025, it’s estimated to hit $20 billion. Companies need cybersecurity insurance to counter growing threats and constantly expanding networks.

But that doesn’t mean that you can afford any cost. Let’s examine the benefits of cybersecurity insurance coverage—and ways you can get a discount.

Cybersecurity insurance is more important than ever

The costs of a data breach can be devastating to a business. According to the 2019 Cost of a Data Breach Report, the average cost of a data breach is now $3.92 million. And if your business suffers from a data breach, you’ll experience the direct and indirect costs of disruption, such as a loss of client faith.

Cybersecurity insurance isn’t optional. For businesses today, it’s essential; without it, a data breach could shutter your doors. Still, the cost of cybersecurity insurance may appear to be prohibitive. There are some ways you can reduce your cybersecurity insurance cost without sacrificing your coverage.

How to reduce your premium costs

First: every insurance company is different. Insurance companies have a base rate that is reduced by discounts they will give you to incentivize creating a safer, more secure environment. What is covered can also vary. You may find a broad cybersecurity insurance coverage policy or a specific cybersecurity insurance ransomware policy; these things can impact your cybersecurity insurance cost.

There are some common insurance discounts you can receive that we’ve listed below—but only your cybersecurity insurance carrier can tell you which discounts they honor.

Bundle with other insurance packages

Many companies will discount your policy if you purchase multiple insurance policies at a time. This is because they save on administration and processing costs. The more business you do with an insurance company, the more likely they are to provide a discount. Many known companies are now providing cybersecurity insurance; check with your current provider.

Regularly audit your systems

Part of being insurable is proving to the cybersecurity insurance company that you are managing your risk. One way to do this is by conducting regular audits of your systems. Some insurance companies may have a basic cybersecurity maturation model that you want to follow or may ask you to comply with existing security standards.

Conduct penetration testing

Provide evidence of your cybersecurity maturity to your insurance company by regularly testing your systems for vulnerabilities. Many insurance companies will give you a discount if you show them that you regularly conduct penetration tests.

Use strong authentication systems

Make it harder for hackers to gain access to your systems by using strong authentication methods, such as two-factor authentication. This will make it more difficult for hackers to access your systems, and insurance companies will be more likely to give you a discount.

Hold regular employee training

Regular training sessions will ensure that your employees are up to date on cybersecurity best practices. This will help reduce the likelihood of human error and show insurance companies that you are taking steps to mitigate risk. And, of course, they’re just a good idea.

Maintain regulatory compliance

Compliance with regulatory standards (such as FedRAMP and NIST) reduces your risk and may reduce your premiums. Your organization can also engage with third-party solutions and software platforms with built-in regulatory compliance.

Create documented processes

Developing and documenting clear processes and policies related to cybersecurity will show insurance companies that you are managing your risk. These processes and policies in place will help to prevent or mitigate the effects of a data breach, and they are the first (and essential) step to developing maturity.

Encrypt your data

Make it more difficult for hackers to use your data by encrypting it. Even if your data is stolen, hackers won’t be able to crack it. Be aware that encryption standards are changing due to the advent of quantum computing; it’s easier to crack encrypted data, so encrypted data needs to use even better encryption.

Reduce the volume of your data

One way to reduce the cost of a data breach is to minimize the amount of data you have. The less data you have, the less there is to lose. In addition, the GDPR and other regulations mandate that organizations only collect the minimum amount of data necessary—so you achieve two major benefits with a single move.

Shop around for better rates

As with any insurance policy, shopping for the best rates can help. Don’t be afraid to ask for quotes from multiple insurers. Compare not only the price but also the coverage. Because the cybersecurity insurance industry is so new, some companies haven’t had the time to build a reputation—for good or for bad. Stick with known names.

Get a higher deductible

Finally, a higher deductible will lower your premium, but make sure you can still afford the out-of-pocket cost if you do have a data breach. In general, a higher deductible is only worth it if you are confident in your organization’s security posture.

Don’t get too cheap with your cybersecurity insurance

While it’s important to get the best rate possible, don’t sacrifice coverage to save a few dollars. A data breach can be extremely costly, and you must ensure you’re covered.

In the event of a data breach, your cybersecurity insurance (depending on the policy) may cover:

• Your business being disrupted
• Hiring a public relations firm to help with damage control
• Notifying your customers or clients that their data has been compromised
• Credit monitoring services for those affected by the breach
• Any fines or penalties imposed by regulatory agencies
• Lawsuits filed against your organization

Some policies will also cover the cost of hiring a cybersecurity firm to help you recover from the breach and ensure it doesn’t happen again.

Cybersecurity insurance is an important part of any organization’s risk management strategy. You can lower your insurance costs by taking steps to reduce your risk. And if you have a data breach, you’ll be glad you paid for the needed coverage.

Work with an MSP to reduce your cybersecurity insurance costs

If you partner with a managed services provider, their team of security experts can take many of the actions required to earn insurance discounts on your behalf. Simply engaging with a managed security service could reduce insurance costs, as your organization will have 24/7 professional protection against disruption and intrusion.

Your managed services provider can review your security landscape, make suggestions and bring you up to current cybersecurity insurance requirements. From there, you can find a cost-effective cybersecurity insurance policy that offers you the coverage your organization needs.