In recent years, cyber threats have become increasingly sophisticated and pervasive, making it more critical for individuals and businesses to protect themselves against cyber risks. Cyber insurance is an effective way to mitigate the financial losses resulting from a cyber-attack.
But with the rise of cyber threats, many insurance companies now require policyholders to have multi-factor authentication (MFA) in place.
What do you have to look out for when selecting cyber insurance? Do you even need it? And how can MFA make it easier to obtain cyber insurance?
Here, we’ll answer your questions so you can make the right decision for your business.
What is cyber insurance?
Cyber insurance is a type of insurance that provides financial coverage for businesses against cyber risks.
Cyber risks include data breaches, phishing, and other digital crimes.
What does cyber insurance cover UK cover?
The coverage provided by cyber insurance varies depending on the policy. Generally, cyber insurance policies cover first-party and third-party losses.
First-party losses include expenses related to data recovery, business interruption, and reputational damage.
Third-party losses include claims against the company by customers or vendors for damages related to a data breach or cyber-attack.
In the UK, cyber insurance policies can provide coverage for a range of losses, including:
- Business interruption costs
- Loss of income due to cyber-attacks
- Legal expenses and liability costs
- Data recovery costs
- Notification and credit monitoring costs
- Cyber extortion costs
What does cyber insurance not cover?
While cyber insurance policies cover a range of cyber risks, there are some exclusions and limitations. That may vary based on the policy and insurance provider, but some common examples include the following:
- Intentional acts: Cyber insurance policies generally do not cover losses from the policyholder’s intentional acts or criminal behaviour.
- Physical damage: Cyber insurance typically covers financial losses from cyber incidents but may not cover physical damage to property or equipment caused by a cyber-attack.
- Regulatory fines and penalties: Cyber insurance policies may not cover fines or penalties imposed by regulatory bodies for non-compliance with data protection laws or other regulations.
- War and terrorism: Some cyber insurance policies exclude losses resulting from acts of war or terrorism.
- Known vulnerabilities: If a cyber-attack exploits a known vulnerability the policyholder failed to address, the insurance company may not cover the resulting losses.
It’s important to carefully review the terms and conditions of a cyber insurance policy to understand what is and is not covered. Working with an insurance provider to meet specific needs and risks is best.
Is cyber insurance worth it?
As with every insurance, many people question if it is worth it. But the cost of a cyber-attack can be significant. Just look at these numbers:
In 2022, the overall cost and the average cost per record affected by a data breach reached a seven-year high. A data breach’s average global total cost is now £3.93 million. The cost of a data breach per record was £148 globally, up 1.9% from £145 in 2021.
While the cost of cyber insurance premiums may seem high, the potential cost of a cyber-attack can be much higher. Cyber insurance can provide peace of mind knowing that you are financially protected in the event of a cyber-attack. It can also help to cover the costs associated with improving cybersecurity measures to prevent future cyber-attacks.
Is it hard to get cyber insurance?
Cyber insurance policies can be complex and require detailed information about security measures. Insurance companies may require policyholders to meet specific security standards, such as having a certain level of encryption or using particular security software. Crucially, insurance companies may require policyholders to have multi-factor authentication (MFA) in place to qualify for coverage.
What is MFA?
MFA is an authentication process that requires two or more forms of identification to access an account or system. MFA can include
- something you know, such as a PIN or traditionally, a password;
- something you have, such as a token or smart card;
- or something you are, such as a fingerprint or facial recognition.
Is MFA a requirement for cyber insurance?
In recent years, many insurance providers have made Multi-Factor Authentication (MFA) a requirement for cyber insurance coverage. MFA adds an extra layer of security to the authentication process, making it more difficult for hackers to access sensitive data or systems.
MFA is becoming increasingly important as cyber threats become more sophisticated. Insurance companies recognise the importance of MFA and require policyholders to implement MFA as part of their cybersecurity measures.
The specific requirements for cyber insurance coverage may vary depending on the policy and insurance provider. It’s crucial to carefully review the policy terms and conditions to understand the specific requirements and limitations of the coverage.
In any case, implementing MFA is a recommended best practice for cybersecurity, regardless of whether it is required to obtain cyber insurance coverage. MFA can help to protect against common types of cyber-attacks, such as phishing and stolen passwords, and provide an additional layer of defence against cyber incidents.
Cyber insurance vs cyber security
Cyber insurance and cybersecurity are two different concepts, but they are essential for protecting against cyber threats.
Cybersecurity is a proactive approach to preventing cyber incidents from occurring in the first place. Cybersecurity refers to the practices and technologies used to protect against unauthorised access, use, disclosure, disruption, modification, or destruction of digital data or systems. It includes measures like firewalls, antivirus software, intrusion detection systems, and employee training on safe computing practices.
On the other hand, cyber insurance is a risk management tool that helps organisations mitigate the financial impact of a cyber incident.
Cyber insurance policies cover a range of cyber risks, including data breaches, network interruptions, and cyber extortion. The coverage may include legal fees, forensics investigations, notification costs, and business interruption losses.
While cybersecurity is focused on preventing cyber incidents, cyber insurance is designed to provide financial protection if an incident occurs. Both are essential components of a comprehensive cybersecurity strategy, and having both in place is recommended to protect against cyber threats.
In summary, cybersecurity and cyber insurance work together to provide a comprehensive approach to protecting against cyber threats.
Cybersecurity helps prevent incidents from occurring, while cyber insurance provides financial protection in the event of an incident.
Cyber insurance and MFA
Cyber insurance is an effective way to mitigate financial losses resulting from cyber-attacks. With the rise of cyber threats, insurance companies now require policyholders to have multi-factor authentication (MFA) in place. Having MFA in place is crucial to get eligible for many cyber insurances.
You can use secure customer authentication through MIRACL Trust to make the process easier. MIRACL requires just a single-step to log into the system, and it blocks phishing, credential stuffing, password spraying, and man-in-the-middle attacks. With the highest login success rate in the industry up to 99.997% and costs of one-tenth of the industry alternatives, you will increase overall safety and revenue.
To see for yourself how easy it is to implement MIRACL Trust, schedule a demo today.