Obstacles to Getting Coverage

Channel Futures: Is it increasingly difficult to get cyber insurance?

LogicGate’s Jon Siegler: It’s becoming more complicated and it’s getting more scrutiny because the insurance companies are not making as much money off of it anymore. They’re being more selective about what companies they will insure. They’re reducing the product you get so they’re lowering the threshold at which they’ll pay out on those policies. Certain things are getting carved out of them. For example, there’s one insurer that … if you’re not updating your software properly as the organization that’s insured, they won’t cover that. So if you’re using an out-of-date patch — and we hear about that all the time where there’s an exploit and companies aren’t patching it in time — it’s actually not reimbursing for those types of things.

In addition, the cost is going up for organizations as well. Not every company can afford the coverage that they need these days. There’s also the volume of questions that are getting asked on applications is increasing. So the number of things that you need to attest to and comply with are ever growing. So definitely it’s getting more onerous to apply for and get approved for the limits that you might need. On the other side of things, we’re also seeing in contractual language between businesses they want to see more cyber insurance. So there are oftentimes whenever you’re doing contracts, there will be an insurance limit. You need to have $5 million in cyber insurance coverage. Well, that limit that they’re requiring you to have for being a partner to them and working with them is ever increasing as well. It’s like pressure on both sides. The insurance company doesn’t want to cover you for as high of an amount anymore. And your potential customers or partners are increasing the limit they desire of their their vendors to have. So there’s … this two-sided situation that’s going on.