As a business owner, you know the importance of protecting your company from potential risks and liabilities. That’s why you have business insurance to safeguard your assets and mitigate potential losses. But what happens when your insurance provider starts asking about your cybersecurity measures?
In today’s digital age, cyberthreats are a growing concern for businesses of all sizes. According to a report by the Ponemon Institute, the average cost of a data breach for a company is $3.86 million. This is why insurance companies are now taking a closer look at a business’ cybersecurity measures before providing coverage. In this article, we’ll explore why your insurance provider is asking about your cybersecurity and what you can do to ensure you have the necessary measures in place.
Help! My Insurance Provider is Asking Questions About My IT!
Insurance companies are in the business of assessing risk. They want to ensure that the businesses they insure take the necessary precautions to protect themselves from potential threats. With the rise of cyberattacks and data breaches, insurance providers now include cybersecurity in their risk assessment process.
In the past, insurance companies may have only asked about physical security measures, such as locks and alarms. But with the increasing reliance on technology and the potential for cyberattacks, they are also looking at a business’ digital security.
It might shock some business owners when they receive a long questionnaire with a lot of technical questions from their business insurance agent. Every provider will be a little different, but in our experience, they generally ask questions about who handles your IT, how many endpoints you have, what vendors you use, and questions about your backup, cloud hosting, and cybersecurity.
Your answers to these questions could potentially play a role in your actual coverage, your premiums, and, in some cases, whether you are eligible for coverage.
Here’s What Your Insurance Company is Typically Asking
We’ll add a big disclaimer here that every insurance company will handle this a little differently, so there might be some variations. This may also change depending on your industry, the size of your organization, and plenty of other factors.
In general, here are some of the big questions that you’ll likely be asked:
- Do you store sensitive information? If so, where, and how do you back it up?
- What kind of security policies do you enforce (strong passwords, multi-factor authentication, etc.)?
- Who is responsible for the management and upkeep of your information technology?
- How are you protecting electronic correspondence?
- Are you providing security awareness training and testing in your organization?
Your insurance agent probably isn’t going to be able to go into a lot of depth with these questions either; they aren’t IT technicians. Some might be able to give you some deeper insight into what they are looking for and what matters for their policies, but in most cases that we’ve seen, they can’t really offer a lot in the way of helping your business meet their standards. This is as expected, their role is to provide you with insurance.
What are the Risks of Not Having Adequate Cybersecurity Measures?
The consequences of a cyberattack can be devastating for a business. Not only can it result in financial losses, but it can also damage a company’s reputation and erode customer trust. Here are some of the potential risks of not having adequate cybersecurity measures in place:
Financial Losses
A cyberattack can result in significant financial losses for a business. This can include the cost of recovering from the attack, such as restoring data and systems, and any legal fees or fines that may be incurred. In addition, a data breach can lead to lost revenue and customers and damage to a company’s brand and reputation.
Legal Consequences
Depending on the nature of the cyberattack, a business may face legal consequences. This can include lawsuits from customers or clients whose personal information was compromised and regulatory fines for not complying with data protection laws.
Damage to Reputation
A data breach can significantly damage a company’s reputation and erode customer trust. This can result in lost business and difficulty attracting new customers. It can also lead to negative media coverage and damage a company’s brand image.
What Cybersecurity Measures Should I Have in Place?
So, what can you do to ensure you have adequate cybersecurity measures in place? Here are some key steps you can take to protect your business from cyberthreats:
- Conduct a Risk Assessment
Conducting a risk assessment is the first step in developing a cybersecurity plan. This involves identifying potential vulnerabilities and threats to your business’ digital assets. It’s important to involve all departments in this process, as each may have different risks and vulnerabilities. - Develop a Cybersecurity Plan
Based on the results of your risk assessment, you can develop a cybersecurity plan that outlines the measures you will take to protect your business. This should include policies and procedures for data protection, network security, and employee training. - Implement Strong Password Policies
Weak passwords are a common entry point for cyberattacks. Ensure your employees use strong, unique passwords for all accounts and systems. Consider implementing multi-factor authentication for added security. - Keep Software and Systems Up to Date
Outdated software and systems can leave your business vulnerable to cyberattacks. Ensure all software and systems are regularly updated with the latest security patches and updates. - Train Employees on Cybersecurity Best Practices
Your employees are often the first line of defense against cyberattacks. Make sure they are trained on how to identify and respond to potential threats. This can include phishing scams, social engineering tactics, and other common methods cybercriminals use. - Backup Your Data Regularly
In the event of a cyberattack, having a backup of your data can be a lifesaver. Make sure you have a regular backup schedule in place and that backups are stored securely and tested regularly. - Consider Cyber Insurance
In addition to traditional business insurance, you may also want to consider cyber insurance. This can provide coverage for losses and damages resulting from a cyberattack, as well as legal fees and regulatory fines.
What Should I Do if My Insurance Provider Is Asking About My Cybersecurity?
If your insurance provider is asking about your cybersecurity measures, it’s important to take action. Here are some steps you can take to ensure you have the necessary measures in place:
Review Your Current Cybersecurity Measures
Review your current cybersecurity measures and identify potential gaps or vulnerabilities. This can include conducting a risk assessment and reviewing your policies and procedures.
Implement Additional Measures if Needed
If you identify any gaps in your cybersecurity, take steps to address them. This may involve implementing new policies and procedures, investing in new technology, or providing additional employee training.
Be Transparent with Your Insurance Provider
If your insurance provider asks about your cybersecurity, it’s important to be transparent and provide them with the necessary information. This can help them assess your risk and provide you with the appropriate coverage.
Consider Working with a Cybersecurity Consultant
If you’re unsure about your current cybersecurity measures, consider working with a cybersecurity consultant. They can help you identify potential risks and vulnerabilities and develop a plan to address them.
This Also Falls in Line with the New York State SHIELD Act
The New York State SHIELD Act is a data security law that applies to businesses operating in New York, including those in Brooklyn. It was enacted to enhance data security and protect the personal information of New York residents.
Under the SHIELD Act, businesses must implement reasonable safeguards to protect sensitive data. This includes implementing a data security program with administrative, technical, and physical safeguards. The Act also requires businesses to conduct regular risk assessments, train employees on data security practices, and ensure that third-party service providers have adequate data security measures.
In the event of a data breach, the SHIELD Act requires businesses to notify affected individuals and the New York State Attorney General’s office. The notification must be made in a timely manner and include specific information about the breach.
For Brooklyn businesses, it is important to understand and comply with the requirements of the New York State SHIELD Act. This includes implementing appropriate data security measures, conducting regular risk assessments, and ensuring that employees are trained on data security best practices. By doing so, businesses can protect their customers’ personal information and avoid potential legal and reputational consequences.
By taking proactive steps to secure your business, starting with those that your business insurance provider is checking up on, you will take significant steps toward preventing breaches and other problems in the first place.
Setton Consulting is Here to Help
In today’s digital landscape, cybersecurity is critical to protecting your business from potential risks and liabilities. As insurance providers start to include cybersecurity in their risk assessment process, it’s important to ensure you have the necessary measures in place. By conducting a risk assessment, developing a cybersecurity plan, and implementing best practices, you can protect your business from cyberthreats and ensure you have the coverage you need.
If you are in need of an evaluation, request a risk assessment with us today!