Cybercrime and CPA Firms: Why Cybersecurity Insurance Is Needed
Cybercrime continues to rise, threatening businesses across various industries. Certified Public Accounting (CPA) firms are prime targets for cyberattacks, because of the personally identifiable information and financial records they possess. With the ongoing evolution of cybercrime, C-suite executives and technology experts are recognizing that cybersecurity insurance coverage is an important layer in their CPA firm’s cybersecurity defense. They understand the importance of learning about cybersecurity insurance requirements to adequately protect their firms. This blog will examine what is cybersecurity insurance, the different types of cybersecurity insurance coverage, and other intricacies of the cybersecurity insurance market. The blog will conclude by reviewing the benefits for CPA firms in having robust cybersecurity prevention strategies when securing cybersecurity insurance coverage.
What Is Cybersecurity Insurance?
Cybersecurity insurance was developed to protect businesses from losses resulting from cyberattacks and technology-related risks. How does cybersecurity insurance protect CPA firms?
- Offers first-party cybersecurity insurance coverage. A first-party cybersecurity insurance policy protects a firm’s data, which includes employee and customer information. Examples of first-party cybersecurity insurance coverage include providing legal counsel to advise on regulatory obligations, recovery and replacement of stolen data, lost income compensation, and forensic help to investigate the cyberattack.
- Provides third-party cybersecurity insurance coverage. A third-party cybersecurity insurance policy protects a CPA firm if a third party brings a claim against a firm because of a breach. This type of cybersecurity insurance policy provides coverage for expenses related to litigation, payment to clients impacted by a data breach, and claims or settlement expenses.
- Allows for different types of cybersecurity insurance coverage. Certain cybersecurity insurance providers offer coverage to protect against different types of cyberattacks. Top cybersecurity insurance companies offer cyber liability insurance as well as a comprehensive data breach policy.
- Helps alleviate costs. A cybercrime incident can cause dramatic revenue harm, legal issues, equipment damages and loss of clients. Cybersecurity insurance coverage alleviates the primary costs related to devastating security breaches.
There are numerous benefits to cybersecurity insurance. Understanding what is included in a cybersecurity insurance policy is important in deciding the best way to protect your CPA firm in the event of a cyberattack.
What Risk Exposures Are Covered by a Cybersecurity Insurance Policy?
There are myriad privacy and exposure risks CPA firms face in this age of increasingly expensive, frequent cyberattacks. The risks from a cybercrime can be mitigated with a robust cybersecurity insurance policy.
- Breach of Data. Cyberattacks target both small and large businesses. A breach can compromise the personal identifiable information of clients and employees.
- Denial of Service or Ransomware Attack. As reported in Accounting Today ransomware insurance claims rose 35% in 2020 and 2021.
- A cybersecurity insurance ransomware policy would effectively protect a CPA firm if their operating systems are rendered inoperable for an extended period of time.
- The potential loss of money from a ransomware attack is staggering when factoring in loss of revenue, liability risk factors, and loss of clients.
Cybersecurity insurance policies vary significantly. It’s important for C-suite executives to review the different policies offered by cybersecurity insurance companies.
How Much Does Cybersecurity Insurance Cost?
A nationwide study by Advisor Smith of over 43 insurance companies found cybersecurity insurance premiums ranged from $650 to $2,357 annually with a million-dollar liability limit and $10,000 deductible. The findings were based on moderate risk companies. Other factors are also considered:
- Type of business. The nature of a business is important to cybersecurity insurance providers. For example, the number of sensitive employee and customer records stored by a firm are considered. Cybersecurity insurance companies consider whether credit card or banking information is stored by a firm when determining cybersecurity insurance costs.
- Size of the business. The size of a business is a factor in determining cybersecurity insurance cost.
- Location of the business. The state where a business is located has an impact on the cost of cybersecurity insurance.
- Increasing costs. The average monthly premium cost of cybersecurity insurance is increasing because of the increase in ransomware attacks and data breaches. In fact, the average costs of premiums have increased 25% with certain policyholders from 2021 to 2022. In some cases, policy holders are paying over an 80% increased rate. Cybersecurity insurance cost of course depends on the level of coverage, deductible and prior claims history.
- Existing security measures. The application process with cybersecurity insurance providers includes reviewing the business’s cybersecurity measures in place. When seeking coverage, top cybersecurity insurance companies may rigorously question applicants on their cybersecurity protocol.
Protecting CPA firms (regardless of size or locale of the firm) from cybersecurity threats begins with strong cybersecurity measures. Insurers often require CPA firms to have cyber resilience when they seek coverage. Fortunately, there are specialized IT service providers who can provide excellent cybersecurity solutions and strategies.
How Can Cetrom Prepare a CPA Firm To Qualify for Vigorous Cybersecurity Insurance Coverage?
Cetrom is a proven IT cloud-based security system provider, specializing 100 percent on the cybersecurity of CPA firms. Cetrom’s multi-level approach to cybersecurity helps prevent, detect, and combat even the most challenging cybersecurity threats. Cetrom provides state-of-the art security technologies.
Concluding Thoughts
CPA firms who commit to strong IT solutions, in conjunction with a solid cybersecurity insurance plan, can rest assured they have done everything possible to protect their firm. Let Cetrom help prepare your CPA firm to withstand even the most arduous insurance application, so you can focus your talents on helping clients feel positive about their financial well-being. Contact Cetrom today to learn more about how we can protect your CPA firm from cybersecurity threats.