How hybrid cyber insurance can help mitigate the financial risk of cybercrime
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Updated: 6th October
Data breaches aren’t cheap. If an organization fails to protect its critical data assets, then it can cost millions to repair the damage done. In fact, according to IBM, the global average total cost of a data breach is $4.35 million.
More and more enterprises are turning to cyber insurance to mitigate the financial risk of a data breach, and many vendors are starting to turn to hybrid insurance offerings to control risk, mixing security controls alongside insurance coverage.
For instance, Elpha Secure Technology, which announced it has raised $20 million as part of a series A funding round led by Canapi Ventures, provides encrypted backups, multi-factor authentication, version control, and security patching, alongside a cyber insurance policy.
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This approach gives organizations a convenient way to combine the implementation of security controls and insurance as part of a single solution.
Paying the price of cybersecurity
The cyber insurance industry is in a state of uncertainty following Lloyd’s decision to remove coverage for nation-state attacks.
In any case, Elpha’s latest funding shows that investors are confident that enterprise cyber insurance coverage remains critical for surviving the current threat landscape.
“With accelerating cyber insurance losses due to ransomware, social engineering, and other drivers of loss, insurance carriers are now requiring cybersecurity controls be in place before insuring a small business,” said Preetam Dutta, CEO of Elpha Secure. “These controls can be costly and technically challenging for a small business. Elpha’s solution alleviates the need for small businesses to do the heavy lifting by delivering the controls to the organization.”
Dutta noted that the software uses machine learning to identify threats in real-time and provides organizations with a team of security experts who can help to remediate incidents or initiate a claim.
The cyber insurance market
Broadly speaking, the cyber insurance market continues to grow, with researchers estimating that the global cyber insurance market will grow from $7.60 billion in 2021 to reach a value of $36.85 billion in 2028, growing at a compound annual growth rate (CAGR) of 25.3%.
Currently, Elpha isn’t the only provider taking a platform-based approach to managing cyber insurance. Competitors like Coalition, provide enterprises with an active insurance offering providing a live view of digital risks throughout the environment, while offering on-demand support from a broker team to help mitigate potential liabilities.
Coalition recently closed a series F funding round with $250 million and achieved a valuation of $5 billion.
Another competitor is Balbix, with The Balbix Security Cloud, a cybersecurity posture automation platform that provides visibility over cyber risk alongside a dollar amount by automatically identifying and mitigating vulnerabilities throughout the environment. Earlier this year, Balbix announced raising $70 million in series C funding.
“Elpha is the first to combine proprietary software with a full cybersecurity insurance policy,” Dutta said. “The combination of cyber insurance and cybersecurity controls in one package is the first of its kind and enables Elpha to be a single-stop solution for all of a small business’s cyber needs.”
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