Cyber Insurance: A Safety Net or a False Sense of Security?

Cyber insurance is becoming a must-have for businesses, but there’s a growing concern that it’s not the silver bullet everyone hopes for. Insurers are facing a surge in claims, leading them to push basic, often ineffective, tools onto businesses to cut their own losses. This approach might tick boxes for the insurer, but it doesn’t truly protect your business.

Key Takeaways

• Cyber insurance should be a backup, not your primary defence strategy.
• Insurers are using cheap tools to reduce their risk, not necessarily yours.
• Focus on building a cyber roadmap based on genuine business risks, guided by IT leadership.

The Insurance Company’s Dilemma

The world of cyber threats is pretty wild right now, and the risk is a constant headache. While compliance is important, it’s not always enough. Many businesses are looking to cyber insurance as a way to manage this risk. However, insurance companies are getting hit hard by claims, with payouts sometimes doubling or tripling year on year. This isn’t sustainable for them.

To cope, insurers are rolling out tools they believe will help businesses control their cyber risks. The catch? These tools are often the cheapest available options, and their main goal is to reduce the insurer’s exposure. They might flag obvious issues, like open ports, and refuse to insure businesses with those problems. This might get rid of the riskiest 10% of companies, but it doesn’t really lower the risk for the majority of businesses.

Why These Tools Fall Short

The problem is that these tools aren’t the best in class, and they don’t cover everything needed for proper security. It’s a bit like confusing a vulnerability scan with a penetration test. A penetration test involves a team actively trying to find weaknesses in your network, while a vulnerability scan is more like a quick check from the outside to see if there are any obvious holes. A scan is useful for making sure you haven’t left the doors wide open, but it’s only a tiny part of what’s needed for real security.

Similarly, many insurance companies offer security awareness training, but the quality can be quite poor. They also provide tools for vulnerability assessments on devices, which often don’t measure up to the standards used by IT service providers. The real issue arises when management teams ignore their own IT experts and instead follow the insurance company’s advice. This can lead to a focus on issues that aren’t the highest priority for the business’s actual security.

Building a Real Cyber Strategy

Instead of relying on insurers’ checklists, businesses need a proper plan. This means having a budget and identifying the right tools to manage risk effectively. Letting your insurance company dictate your security strategy isn’t wise. Their primary aim is to reduce the likelihood of a claim and, if a claim is made, to minimise the payout. They aren’t there to prevent serious incidents from happening in the first place.

It’s far better to have a cyber roadmap that’s driven by actual business risks and guided by cybersecurity experts. These professionals can advise on the most effective measures for your specific situation. Simply spending money on IT isn’t enough if basic security practices are ignored, like weak password management or running outdated systems that even basic scanners might miss. This leaves the business vulnerable.

While the advice from insurance companies might not be entirely wrong, it’s often not the top priority for your business’s security. A clear strategy and roadmap from your IT team, focused on real risks, is what truly helps mitigate threats and keeps your business safe.