Is cyber insurance now reaching a tipping point of adoption? It got a big push this week.
On Feb. 5., two of the IT industry's biggest players, Apple and Cisco Systems, along with insurance broker and risk consulting services provider Aon, and Allianz, an insurance provider, announced a new cyber risk management solution for businesses. The agreement will give businesses that use Apple and Cisco technology products access to better terms for cybersecurity insurance, and is a continuation of Apple and Cisco's partnership.
The new agreement suggests greater cybersecurity awareness is leading more organizations to move beyond technical responses and now look to policy responses to address security risk. The financial downside to a malware attack is looming ever larger in enterprise risk assessments.
In 2017, the average cost of a data breach in North America was $1.3 million for enterprises and $117,000 for small and medium-sized businesses, according to a report from Kaspersky Lab, CSO Online notes. Cybersecurity Ventures predicted last year that global ransomware damage costs would exceed $5 billion in 2017, up from $325 million in 2015.
"Ransomware is an evolving risk that impacts every level of an enterprise," Jason Hogg, CEO of Aon Cyber Solutions, says in a statement. "Organizations urgently need to be managing these risks from both the technical and the financial perspective."
How Apple and Cisco's Cybersecurity Program Will Work
The agreement between Apple, Cisco, Aon and Allianz is designed to help organizations better protect themselves from risks associated with malware and other malware-focused threats.
An upfront security evaluation by Aon and the use of security-minded products from Apple and Cisco will set organizations up for a discounted cyber insurance policy from Allianz.
Aon cybersecurity professionals will assess interested organizations' IT security posture and recommend ways to help improve their cybersecurity defenses.
The foundation of this package is Apple's iOS environment, which is tightly designed and integrated with security in mind. "The choice of technology providers plays a critical role in any company's defense against cyberattacks," Apple CEO Tim Cook says in a statement. "That's why, from the beginning, Apple has built products from the ground up with security in mind, and one of the many reasons why businesses around the world are choosing our products to power their enterprise."
Cisco's Ransomware Defense technology, which leverages industry-leading threat intelligence from Cisco Talos, extends security out into the network, protecting email systems, providing next-generation endpoint coverage and offering cloud-delivered malicious internet site blocking. "Cisco Security technology is central to the new holistic risk management solution and we are excited to bring another important benefit to our customers with greater options for cyber insurance," Cisco CEO Chuck Robbins says in a statement.
And Allianz is offering an enhanced cyber insurance policy to companies using Apple and Cisco's technology in accordance with Aon's evaluation. The policy will have competitive policy coverage terms and conditions, including the possibility of qualifying for lower, or even no, deductibles in certain cases. And policyholders will also have access to both Cisco and Aon's incident response teams in the event of a malware attack.
"The key here is a holistic approach to cyber," Hogg tells Reuters.
The Growing Cyber Insurance Market
The widespread threat posed by malware, such as the recent WannaCry attack, has raised the awareness of security threats within many organizations. Shipping giant Maersk said last year that the NotPetya malware attack could cost the company $300 million.
Cybersecurity extends into many different parts of the enterprise, which has created a need for a more holistic, enterprisewide approach to addressing this risk, from both a technical and a financial perspective.
Recent growth in the cyber insurance industry reflects this need. Cyber insurance premiums grew to $1.35 billion in 2016, a 35 percent increase from 2015, according to reports by Fitch Ratings and A.M. Best, notes Insurance Journal.
And the Council of Insurance Agents and Brokers' Cyber Insurance Market Watch Survey reported in May that roughly 32 percent of respondents' clients purchased some form of cyber liability and/or data breach coverage in the last six months, compared to 29 percent in October 2016.
Apple and Cisco's participation in this solution is just the latest indicator that cyber insurance is becoming a necessary part of an organization's response to the evolving security threats it faces today and will continue to confront tomorrow.