Cybersecurity insurance premiums have consistently increased as organizations struggle to meet insurers’ increasingly stringent requirements. As cyber threats become more complex, dynamic, and evolving, insurers have become more cautious, with policies demanding comprehensive risk mitigation strategies and robust data security measures.

Data Security Posture Management (DSPM) offers a proactive, technology-driven solution to these challenges, enabling organizations to identify, classify, and secure sensitive data across cloud, hybrid, and on-premises environments. By enhancing data visibility, mitigating risks, and demonstrating robust security practices, DSPM strengthens an organization’s security posture and helps reduce cybersecurity insurance premiums.

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The Challenge: Rising Cyber Insurance Costs

In 2024, the average data breach cost soared to a staggering $4.88 million, up from $4.45 million in 2023—the highest ever recorded in IBM’s annual report’s history. The rising rate of data breach frequency and cyberattacks have increased insurance premiums for businesses across all industries. Insurers are tightening requirements and demanding more substantial evidence of risk mitigation strategies before offering reduced rates.

Key Drivers of Rising Premiums

  • Increased Breach Frequency: Cyberattacks, such as ransomware, are becoming more frequent and sophisticated, driving up insurer payouts.
  • Stricter Underwriting Criteria: Insurers now require evidence of proactive cybersecurity measures, including access management, encryption, and risk mitigation strategies.
  • Higher Payout Thresholds: The average data breach cost has surged, placing more financial risk on insurers and increasing premiums.

Common Gaps in Meeting Cyber Insurance Requirements

  • Lack of Data Visibility: Organizations often struggle to know where their sensitive data resides and how it is accessed.
  • Inadequate Risk Assessment: Failure to identify and prioritize risks leads to ineffective mitigation strategies.
  • Fragmented Security Controls: Disjointed tools and processes result in gaps that insurers view as potential liabilities.

What Does Cyber Insurance Cover?

Cyber insurance offers a sense of peace and financial protection after an attack. By adopting strong cybersecurity practices and aligning with insurer requirements, organizations can unlock the full benefits of cyber insurance while minimizing risks and financial exposure. Cybersecurity insurance typically covers the following:

Incident Response Costs

When a cyberattack occurs, organizations must act quickly to contain the damage. Cyber insurance typically covers the costs associated with incident response, including:

  • Forensic Investigations: Hiring cybersecurity experts to determine a breach’s source, scope, and impact.
  • Breach Notifications: Communicating with affected customers, employees, or partners as data privacy laws like GDPR or CCPA require.
  • Credit Monitoring: Providing identity theft and credit monitoring services to individuals whose data has been exposed during a breach.

Legal and Regulatory Costs

Data breaches often result in legal consequences, especially if sensitive personal or financial data is exposed. Cyber insurance can help cover the following:

  • Legal Fees: Costs associated with legal representation and defending against lawsuits or claims.
  • Fines and Penalties: Payments related to violations of data protection regulations, such as GDPR, HIPAA, or PCI DSS (note: not all policies cover regulatory fines).
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Business Interruption

Cyberattacks can lead to operational downtime, resulting in significant financial losses. Business interruption coverage helps organizations recoup lost revenue due to:

Ransomware Payments

Ransomware attacks are rising, with many organizations paying attackers to regain access to their systems or data. Some cyber insurance policies cover the cost of:

  • Ransom payments (though this is subject to legal and ethical considerations).
  • Negotiation services with cyber criminals.
  • Data recovery and decryption efforts.

Third-Party Liability

Cyber incidents don’t just impact the targeted organization—they can also affect customers, partners, and other stakeholders. Cyber insurance provides third-party liability coverage for:

  • Data Breach Claims: Lawsuits from individuals or organizations whose sensitive data was compromised.
  • Contractual Obligations: Financial losses related to failing to meet service-level agreements due to a cyberattack.

Strategies to Optimize Cyber Insurance

Cybersecurity Ventures predicts global cybercrime costs will grow by 15% annually over the next five years, reaching a staggering $10.5 trillion by 2025. Increased cybercrime correlates to rising cybersecurity insurance premiums as organizations struggle to meet increasingly stringent requirements. Insurers have become extremely cautious, with policies demanding comprehensive risk mitigation strategies and robust data security measures. Organizations must enhance their cybersecurity posture to secure better coverage and reduce premiums.

1. Adopt a Data-Centric Security Approach

Insurers evaluate how organizations manage and protect their sensitive data. Implementing a Data Security Posture Management (DSPM) solution can help identify and mitigate risks across cloud and on-premises environments, reducing the likelihood of a breach.

2. Implement Zero Trust Architecture

Zero Trust principles—such as least privilege access, multi-factor authentication (MFA), and network segmentation—demonstrate to insurers that your organization is proactive about minimizing attack surfaces.

3. Invest in Incident Response Planning

A well-documented and regularly tested incident response plan reassures insurers that your organization can handle cyber incidents effectively, minimizing damage and recovery time.

4. Leverage AI-Powered Threat Detection

Artificial intelligence (AI) and machine learning (ML) can improve your ability to detect anomalies, mitigate risks, and satisfy insurer expectations for advanced threat detection capabilities.

5. Conduct Regular Security Assessments

Frequent penetration testing, vulnerability assessments, and audits show insurers that your organization is committed to proactively identifying and addressing weaknesses.

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How BigID Helps You Qualify and Reduce Cyber Insurance Costs

BigID’s Data Security Posture Management (DSPM) offers a proactive, data-driven solution enabling organizations to identify, classify, and secure sensitive data across cloud, hybrid, and on-premises environments. By enhancing visibility, mitigating risks, and demonstrating robust security practices, BigID strengthens an organization’s security posture and helps reduce cybersecurity insurance premiums.

Strengthen Risk Posture

  • Discover Data: Discover and classify sensitive data across all structured and unstructured data sources – across the cloud and on-prem.
  • Minimize Attack Surface: Minimize your attack surface by eliminating unnecessary data, including duplicates, ROT (redundant, obsolete, and trivial), dark data, and shadow data. Fewer data points to manage translates to reduced security costs and a smaller vulnerability footprint.
  • Achieve Compliance: Demonstrate robust controls with privacy requirements and key frameworks like GDPR, CCPA, NIST, ISO 27001, HIPAA, and CIS Controls, which insurers often look for in underwriting.

Demonstrate Risk Mitigation Measures

  • Assess Data Risk: Conduct a thorough risk assessment to proactively identify vulnerabilities and mitigate cyber risks across all data for a more robust security posture – on-prem and the cloud, structured and unstructured data.
  • Manage Data Access: Automate and streamline access rights management to sensitive, personal, regulated, and at-risk data across the organization. Monitor, track, investigate, and remediate high-risk data access issues for proactive access control and unwanted data exposure.
  • Accelerate Remediation: Automate remediation actions, including data encryption, deletion, masking, tokenization, and more, at the enterprise scale for faster risk reduction through various security actions, measures, and controls.
  • Implement a Breach Response Plan: Minimize the impact of data breaches with proactive measures to detect, contain, and respond to cybersecurity incidents to address breach notification requirements and reduce the potential impact.

Automate and Simplify Compliance Reporting

  • Manage & Monitor Data Risk: Automatically identify, score, and prioritize critical data risks and vulnerabilities by severity level according to sensitivity, location, accessibility, and more for further investigation.
  • Generate Risk Reports: Automatically generate comprehensive and actionable reports on data risk posture, governance, and compliance. Tailor audit-ready reports that adhere to insurer requirements.

Want to learn more about how to lower cybersecurity insurance premiums with BigID? Schedule a 1:1 Demo with one of our data experts today!