According to recent research by Sophos, cyber insurance has become the new norm, with 91% of organizations reporting having coverage. The survey also found that an additional 8% of organizations plan to obtain coverage within the next year. This indicates the growing recognition and importance of cyber insurance in addressing the risks posed by cyber threats.

The research also highlighted that the quality of an organization’s cyber defenses directly impacts their insurability. Of those who purchased a cyber insurance policy in the last year, 60% said that it affected their ability to obtain coverage, while 62% noted that it impacted the cost of their coverage. Furthermore, 28% stated that it affected the terms of their policy. These findings emphasize the significance of having strong cyber defenses in order to secure favorable insurance coverage.

Sally Adam, Senior Director at Sophos, explained that cyber insurance is a mechanism for transferring cyber risk. Insurers prefer to take on the risk of organizations that are less likely to experience claimable incidents and have lower recovery costs in the event of an incident. Therefore, organizations with strong defense measures are considered more attractive to insurers. Adam noted that “the stronger you are, the more attractive you are to insure.”

In addition to insurability, the research also revealed that cyber insurance plays a crucial role in an organization’s ability to recover from an attack. The data showed that organizations with cyber insurance are more likely to recover encrypted data after a ransomware attack compared to those without coverage. Specifically, 98% of ransomware victims with a standalone policy and 97% with cyber coverage within a wider policy were able to recover their encrypted data, compared to only 84% of those without coverage. This suggests that insurers impose high response preparedness standards, such as regular backups and an Incident Response (IR) plan, which guide victims through the recovery process.

It is worth noting that the research also found that organizations with a standalone cyber insurance policy were more inclined to pay the ransom and successfully retrieve their data. 58% of those with a standalone policy paid the ransom and got their data back, compared to 36% with cyber coverage within a wider policy and 15% without any policy.

As organizations seek to enhance their security measures, working with an insurance provider becomes essential. Adam advises organizations to be transparent about the steps they are taking to reduce cyber risk during the application process. Insurers evaluate the quality of an organization’s defenses when deciding whether or not to provide coverage, determining the cost and limits of the policy. Therefore, organizations should highlight their strong and effective defenses to demonstrate their insurability.

Adam further emphasizes that evaluating defense posture should not stop once a policy is obtained. It should be an ongoing process. Organizations are encouraged to discuss with insurers how their strong defenses will be recognized and rewarded during the coverage period. Sophos has recently partnered with cyber insurance providers, allowing customers to share their Sophos health posture with their insurer. This enables insurers to acknowledge and reward good security posture when it comes to policy renewals.

In conclusion, the research highlights the increasing prevalence of cyber insurance as a risk management tool in the face of evolving cyber threats. It emphasizes the crucial role of strong cyber defenses in securing favorable insurance coverage and facilitating effective recovery from attacks. Organizations are encouraged to prioritize their defense measures and work closely with insurance providers to maximize the value of their policies.

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