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680%.
This is how much the cost of iPromo (asi/229471) cybersecurity insurance policies increased between 2021 and 2022. Given this staggering rise, has Leo Friedman considered withdrawing compensation?
Not for a moment.
“We absolutely need it,” says Friedman, founder and CEO of Chicago-based Distributorship, which pays $21,000 a year for cyber coverage. “The risks of not having it outweigh the costs.”
The iPromo situation is another promotional product that companies (and companies across the industry) are finding themselves in.
Companies, government agencies, utilities and others need coverage more than ever to protect against increasingly sophisticated attacks, and the cost of cybersecurity insurance is skyrocketing.
In addition to rising premiums and deductibles, insurers require insured persons to establish more robust technological safeguards that act as a stronger bulwark against cyberattacks before offering insurance. doing. This is another cost driver and operational complication for companies during promotion and beyond.
Still, some brands’ merchandising executives say it’s a must-do bullet.
“With cyber threats on the rise worldwide, good cyber security insurance is a necessity today.
Rising costs and increasing requirements
Promotional companies aren’t the only ones opposing cybersecurity insurance price hikes.
Consider: Cyber insurance premiums surged an average of 28% in the first quarter of 2022 compared to the fourth quarter of 2021. According to the Council of Insurance Agents and Brokers (CIAB), an association of business insurance and employee benefits brokers.
$86,000
Average cost for a small business to recover from a data breach.(Kaspersky)
Marsh found an even steeper rate of increase in a recent study. The insurance broker/risk advisory firm reports that average cyber insurance rates rose 54% in his July. On the bright side, the survey shows the rate of increase has slowed from 133% in December 2021. Still, 54% are steep.
The main factors driving up the price of compensation are the increasing number of cyberattacks and the economic severity of successful strikes.
In its latest Internet Crime Report, the FBI says the number of cyber-attack complaints it receives in 2021 will increase 7% year-over-year, continuing its upward trend year-over-year. Reports of ransomware attacks, in particular, surged a staggering 51% between 2020 and 2021, according to the FBI. Perhaps even more alarming, potential losses from overall digital raids jumped 64% to over $6.9 billion.
Analysts estimate that most cyberattacks go unreported, with as many as 90% of attacks going unreported in the United States. Researchers at the University of Maryland estimate that a cyberattack occurs every 39 seconds he says. According to the Insurance Information Institute, one-tenth of small businesses are now hit by a cyberattack each year.
The stark reality these statistics illustrate is that cyber insurance providers are exposed to ever-greater levels of risk, forcing them to pay more to their clients’ victims. Driving the rise: The more insurance is actually used (or more likely to be used), the more expensive insurers tend to offer coverage.
$1,589
Average cost of cyber insurance in the US in 2021. However, companies can pay more, depending on their insurance details. For example, the higher your revenues, expenses, and operating costs, the more you can expect to pay for cyber insurance. The more people that have access to the system, the more it will cost. (Advisor Smith)
“Large-scale attacks, such as last year’s Colonial Pipeline ransomware attack that caused a brief gasoline shortage in the southeastern United States, have highlighted the potential for devastating economic damage,” said the U.S. government moneymaker. Zing Director Dan Garcia Diaz said. Accountability room. “As a result, insurers have begun taking steps to limit their exposure to these losses.”
Rising demand is also a factor in the increase in policy. Marsh found that the percentage of people buying cyber insurance for the first time nearly doubled in five years, from 26% in 2016 to 50% in 2021. Some reports indicate that more insurers are entering the market, which could help slow the growth rate. There are still a great many entities that provide coverage. As the demand for coverage increases, so does the cost.
Beyond premium increases, insurers are actively working to minimize losses resulting from cyber claims. They do this by enacting stricter standards that businesses/entities must meet in order to be covered.
“Many insurers now require businesses to have at least two-factor authentication, endpoint detection and response, and advanced system backup services in order to take out policies,” says PA. said Dan Pantano, president and CEO of Trevose, a top 40 supplier based in alphabroder (asi/34063) and Counselors He is a member of the list of the most influential people in the Power 50 promotion.
What does cyber insurance cover?
Cyber insurance is specialized insurance that protects businesses against web-based threats and, more generally, against risks associated with information technology infrastructure and activities. A policy may provide first party coverage, third party coverage, or both. The Federal Trade Commission explains:
First-party cyber coverage protects data, including employee and customer information. This coverage may include the company’s costs related to: Recovery and replacement of lost or stolen data. Customer Notification and Call Center Services. Loss of income due to business interruption. Crisis management and public relations. cyber extortion and fraud; forensic services to investigate breaches; Fees, Fines, and Penalties Related to Cyber Incidents.
Third party cyber coverage generally protects you from liability in the event that a third party makes a claim against you. This compensation may include: Payments to Consumers Affected by Violations. Claims and settlement costs related to disputes or lawsuits. Losses related to defamation and copyright or trademark infringement. Litigation costs and costs of responding to inquiries from regulatory authorities. Other Settlements, Damages and Judgments. and accounting costs.
“The benefits outweigh the costs”
Despite rising costs and growing requirements, many promotional companies are sticking with and even expanding cyber insurance.
Alphabroder suffered a ransomware attack in 2019. Insurance helped. “We used cyber insurance to help recover losses associated with business disruption and system restoration,” he said.
The supplier recently updated its cyber insurance coverage. The premium for the new policy increased by 125% compared to the cost of the previous policy. The deductible has also increased.
Cyber Threat Education at ASI Orlando
At the ASI Show Orlando on Wednesday, January 4, 2023, FBI computer scientist Gary Hopewell will lead an educational session on identifying cyber threats and protecting businesses from them. learn more.
“Given our experience to date and the additional cyber preparedness services currently offered by insurers, we feel that the benefits of taking out insurance outweigh the costs,” says Pantano.
Friedman can sympathize. Earlier this year, our distributor was the victim of a phishing scam. The company received a fraudulent purchase order via email from what it believed was an existing client. However, the client had been hacked, and the fraudsters used this unauthorized access to impersonate a convincing customer. iPromo sent a travel kit worth six figures to the scammer, but no payment was made.
Thankfully, iPromo had good cyber insurance. The company’s operators had to consider many options to determine the appropriate way to classify hacking incidents within their coverage guidelines. Ultimately, the insurance company was able to compensate for the stolen products. A refund is currently pending, but is expected, Friedman says.
“It doesn’t matter if your company is compromised. It matters when and how badly the impact is.” Dan Pantano, Alpha Brodder
“We are seeing a dramatic increase in sophisticated and targeted cyberthreats,” said Friedman. “We need to stay up-to-date with and protect against current threats and anything that may be lurking on the horizon. We are not only providing solutions, but also working to preemptively protect against attacks.”
A few years ago, Geiger had to notify its insurance company that it was investigating a potential breach stemming from one of its remote offices. Fortunately, research has shown that the top 40 companies have not actually been compromised by hackers. That said, the experience has reaffirmed the need for cyber insurance. He’s one of the reasons Geiger didn’t consider letting coverage expire when insurance plans nearly doubled in cost recently. In fact, the company increased his responsibility for expanding coverage from 2021 to 2022. A premium increase is he scheduled for 2023.
Jo-an Lantz, CEO and President of Power 50 member Geiger, said: “We were lucky that the defense held up. But it was another warning that even with the best systems, you have to be careful and pay attention.”
Why Some Promotion Companies Don’t Have Coverage
Some market analysts say that as cyber insurance rates and requirements to obtain coverage continue to rise exponentially, smaller businesses will withdraw coverage, not seek coverage, or simply seek coverage. I am worried that I will not be able to receive compensation even if I want it, or that I will not be able to obtain it, and that I will be exposed to risks that affect my survival.
It is already a reality that many businesses in the promo market do not have cybersecurity insurance. Cost is a big reason for some. “The last time I saw it, it was pretty expensive,” says an executive at a top 40 supplier. “We spend a lot of money on internal security measures to avoid these problems.”
“Cyber insurance is a necessary evil. We are investing to protect ourselves and our customers.” Howard Potter, A&P Master Image
Others don’t get insurance because they don’t realize they might need it or because they think the business insurance they already have will cover them in the event of a breach. While policy details vary, insurance analysts say traditional commercial general liability policies typically lack coverage for cyberattacks. One of her distributors who fell victim to a scam similar to the iPromo trap found it the hard way.
Howard and Amanda Potter never want to be in that position.
The Potters operates Utica for A&P Master Images (asi/102019) based in New York. So while the company is far from being the biggest advertiser, Potters still strategically budgets to ensure he has cyber coverage.
“Cyber insurance is a necessary evil,” says CEO Howard Potter. “With more and more online sales, it is very easy for someone to hack into the network and get customer information. To us, lack of coverage is not worth the bet. We are investing to protect ourselves and our customers.”
Pantano agrees with that rationale. “It’s not a question of whether the company is compromised,” he says. The question is when and to what extent the effects will worsen. ”
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