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Several cyber liability insurance providers now require businesses to adopt multi-factor authentication to qualify for coverage. Here’s why and how to meet the MFA mandates.
VIDEO: The Number One Thing You Better Have For Cyber Insurance | LeadingIT 064
According to Gartner, the global information security market will skyrocket to a record $170.4 billion this year. However, even with the increasing spending on data security, the cost of breaches is still high. IBM estimates each cyberattack costs organizations $3.86 million. By any standard, this can be a massive financial setback.
Therefore, most businesses get cyber liability insurances to shield them from the potential losses because of cyberattacks. For example, Colonial Pipeline already filed a $4.4 million compensation claim with its insurer to cover the ransom paid to hackers in May last year.
Cyber liability insurances cover an organization’s losses from cyber incidents. Cyber liabilities are typically not part of standard property policies. So, most companies acquire supplemental or standalone cyber liability coverages to safeguard their data and IT infrastructure. Depending on the insurance carrier, a cyber insurance policy can cover losses from:
As more organizations consider liability coverage a crucial cybersecurity strategy, PwC approximates that the global cyber insurance market will reach $7.5 billion within the next ten years. However, the brisk growth doesn’t automatically mean that the insurance providers are turning profits. The increasing cost of data breaches has led to massive payouts and losses from the carriers. According to Cyber Economics, the insurance market registered an average loss ratio of 103% last year.
Naturally, the insurers must transfer the losses because of cyberattacks’ cost increments to businesses seeking coverage. A recent study by Aon PLC projects that the cyber liability insurance cost will soar by 20-50% this year. The other strategy that the carriers are adopting to prevent massive payouts is asking businesses to implement MFA to qualify for coverage.
Initially, you could acquire a cyber liability insurance cover without meeting any stringent cybersecurity requirements. However, as the demand for coverage increases and claim severities spike, insurers have become more interested in organizations’ security controls. The less elaborate your cybersecurity measures are, the higher your insurance costs may become. Sometimes, the carrier may reject your application or ask you to tighten your security controls and reapply.
One of the cybersecurity solutions that most cyber liability carriers are keen on is MFA. And reasonably so—the implementation of MFA can drastically reduce your exposure to data breaches. Verizon’s 2021 Data Breach Investigation Report shows that up to 61% of breaches begin as credential thefts. A similar study by Threat Post reveals that stolen passwords and other shared secret accounts are the leading cause of ransomware, which resulted in almost 50% of last year’s cyber insurance claims. Therefore, by demanding mandatory MFA implementation, insurance carriers are not only protecting you but also cutting their exposure.
Multifactor Authentication, MFA, refers to the use of multiple verification methods to identify users before granting them access to accounts. To log in to an account, you must have at least two of the following authenticators:
MFA isn’t just a way to meet cyber liability insurance requirements; it’s an essential data security solution that every Chicagoland business should take seriously. You can implement it internally or outsource help from an IT service provider. Although no cybersecurity solution guarantees surefire protection, MFA can significantly enhance your cybersecurity posture. Here’s how:
LeadingIT offers 24/7, all-inclusive, fast, and friendly technology and cybersecurity support for nonprofits, manufacturers, schools, accounting firms, religious organizations, government, and law offices with 10-200 employees across the Chicagoland area.
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