Cyber Insurance Costs: 5 Trends You Need to Know About
Amid rising cyber threats and booming demand for cyber insurance, the typical cost for such insurance is often a major quest mark for MSPs, MSSPs and end-customers.
Insurance research firm AdvisorSmith recently examined trends surrounding cyber insurance costs in the United States. Here are five cyber insurance cost trends highlighted in AdvisorSmith’s research:
1. The Average Cost of Cyber Insurance Varies Across the United States. On average, U.S. organizations pay $1,485 annually for cyber insurance. New Mexico has the lowest average annual cost for cyber insurance ($1,355.56), while Minnesota has the highest cost ($1,708.11).
2. The Average Cost of Cyber Insurance May Be Declining. U.S. cyber insurance costs fell 1 percent year over year between 2019 and 2020. This may be due to the fact that various cyber insurance companies lowered their premiums or shut down their operations during this time frame.
Still, a range of research suggests cyber insurance premiums are rising — especially within the MSP industry, where insurers now realize IT service providers are prime targets for supply chain attacks.
3. Several Factors Impact the Cost of Cyber Insurance for U.S. Organizations.: An organization’s location and the nature of its operations are two of the biggest factors that impact the cost of cyber insurance in the United States. In addition, the number of sensitive employee and customer records that an organization maintains can affect its cyber insurance costs.
4. Cyber Coverage Limits Are Often Related to Insurance Premiums. The higher the limits of cyber coverage, the more likely it becomes that an organization will have to pay a high premium for its cyber insurance policy. For example, a policy with a cyber liability limit of $250,000 has an average annual premium of $739. Comparatively, a policy with a cyber liability limit of $1 million has an average annual premium of $1,588.
5. Choosing a Low Insurance Deductible Can Result in High Premiums. A typical cyber insurance deductible for a $1 million policy could be $10,000, but organizations may be able to choose a high or low deductible. Selecting a low deductible means an organization will pay less if it suffers a data breach; but, it also may pay high premiums.
Organizations should evaluate a wide range of cyber insurance options. That way, they can select coverages that ensure they are financially protected against data breaches and can get the most value out of their cyber insurance policy.