Many mid-market companies face a critical issue: policy gaps. While mid-market companies are smaller than enterprise-level organizations, they aren't so small that cyber criminals ignore them. Increasingly, mid-market companies are becoming targets.
For example, one successful e-commerce company prided itself on its innovative technologies. As it grew, its owners purchased a cyber insurance policy. A policy gap, however, left them vulnerable. They believed they were covered against all cyber incidents, but their policy covered them only for a data breach, not a ransomware attack or an email compromise.
Soon, ransomware targeted the company's servers, encrypting its data and bringing operations to a standstill. It was too late; the owners were upset to learn that their policy didn't protect against ransomware, and the company was left on its own to deal with the six-figure financial consequences and the incalculable reputational damage.
Cyber Insurance: An Essential Risk Management Tool
Cyber insurance has become an essential business risk management tool, offering financial protection against data breaches, ransomware attacks, and other digital threats. According to CyberCube, a San Francisco analytics firm, U.S. cyber premiums rose from less than $1 billion in 2012 to approximately $11 billion by 2023.
Even with this growth, one challenge still facing mid-market companies is a need for more coverage for certain types of cyber incidents. Many standard cyber policies focus primarily on data breaches, such as sensitive customer information theft. While critical, this coverage doesn't address the full range of cyber risks most companies face.
Some cyber policies don't cover or severely limit ransomware costs. These attacks, becoming more common and costly, can cause significant financial losses due to ransom payments, business interruption, and data recovery costs. A coverage gap can leave companies vulnerable.
Another common gap is insufficient protection against social engineering attacks. These attacks involve tricking employees into transferring funds or sharing sensitive information. Some policies offer limited social engineering attack coverage, but many don't mitigate the full financial risk.
Work Closely With Your Provider to Customize a Policy
For some mid-market companies, it's a struggle to source adequate, affordable policies. Unlike larger organizations, they may lack the resources to reach the wide array of cyber policies available, leaving them vulnerable to unforeseen risks.
To address gaps, mid-market companies should work closely with their insurance agent to customize insurance policies that meet their individual needs. This includes highlighting additional coverage for ransomware, social engineering attacks, or other cyber threats that standard policies don't always cover adequately.
The loss we noted earlier was a harsh lesson for the young e-commerce company's owners, highlighting how important it is to fully understand the types of cyber incidents an insurance policy covers. Following the attack, they promptly contacted their broker and revised the policy to include protection against all cyber threats, safeguarding their business from future disruption.
Now is the Time to Check Your Coverage
Other companies can learn from this experience. Now may be the time to reevaluate your cybersecurity practices, review your coverage, and invest in comprehensive cyber insurance – with no policy gaps.
Protect your business with custom cyber insurance solutions that meet your needs. Download a free copy of our white paper, "Minimizing Risk and Ensuring Your Digital Assets." Then, work with us to build a policy that fits your budget and unique business requirements.
Contact our wholesale division, Brooks Insurance Agency at 818-449-9062 or mccluskey@brooks-ins.com to learn more about cyber insurance coverage solutions.
Brooks Group Insurance Agency | NJ 1575143
About Brooks Insurance Agency
Brooks Insurance Agency is a nationally recognized wholesale insurance brokerage and a subsidiary of Venbrook Specialty Services. As a true excess and surplus lines wholesaler with meaningful company relationships within the specialty marketplace, we provide insurance coverage needs on both an admitted and non-admitted basis. Visit www.brooks-ins.com.
