Strategic Business Networking: MSPs and Insurance Firms
A study conducted by Absolute Market Insights concluded that in five years to come, cyber-crime could cost organizations 5.2 trillion US Dollars each year. Cyber-attacks are continually on the rise, and no company is exempted from small and medium enterprises to Fortune 500 companies.
In the words of Robert S Mueller, an Ex FBI director, “There are two types of companies; those that have been hacked, and those that will be. Cyber-crimes are increasingly becoming more elaborate, challenging to overcome, and more frequent.
Every day we read and hear about companies being breached and losing data with more Managed Services Providers (MSPs) becoming targets of cyber-crime due to the volume of sensitive data that they handle. Instances of ransomware have led MSPs to bankruptcy and even closing down of business.
For this reason, all companies need to acknowledge that they are potential victims of cyber-crime and take the necessary steps to insure themselves. It is no longer a question of if the MSPs will be compromised, but when they’ll be compromised and who will be responsible.
Leveraging Differences to Create Value
With threats continually customizing and hackers looking for more susceptibilities to attack, MSPs cannot solely assure businesses that their data is secure. There is, therefore, a need to partner with cyber-security insurance firms that not only foresee new risks but also empower the MSPs to better protect their clients with a complete set of security controls.
According to Reinmuth, data breaches are headline-grabbers, but only 43% of cyber insurance claims are related to hacks, malware, and viruses. Hence, the remaining 57% of requisitions are filed for other reasons such as stolen devices, rogue employees, and staff negligence. Market.us found out that in 2018 the worldwide cyber insurance industry was priced at 5504 million US dollars and is expected to increase notably at a compound annual growth rate of 26.5% from 2019 to 2028.
Creating Value by Connecting Products to Connect Clients
Most Managed Service Providers buy insurance for themselves, some act as consultants and advise clients on which insurance policy to buy, and some represent insurance companies by acting as brokers. A company will choose an MSP that will cover the risks incurred in the event of a data breach over one that assures it that its data is safe since there’s no surety for data security. The company would be more at ease to associate with an MSP that has a cyber insurance cover.
Therefore, an MSP needs to choose a reliable and authorized cybersecurity liability insurance partner, one that specializes in the IT industry, as it will enable them to gain more traction with tech-oriented businesses. Insurance permits an MSP to transfer liability risk associated with data infringement and data loss.
Going Beyond to Nurture the Relationship Throughout the Life of the Partnership
When the contract between the MSP and the insurance provider is appropriately structured, the MSP can provide services that address the risks and threat environment to its client without taking more risks than what the insurance company receives. However, the MSP must ensure that they are doing everything possible to ensure data security on their end and that the client is also doing the same.
MSPs should sign-up with insurance partners that offer a full first-party cover that will protect the MSP and third-party cover, which will protect the MSP from client claims due to business interruption. The cyber insurance cover that an MSP gets is dependent on its business revenue.
It is, therefore, crucial for a company to pick a reliable and authorized Managed Services Provider. There are no laid out policies for cyber insurance, some insurance providers cover data loss, cyber extortion, and rogue employees, and some don’t. With cyber liability insurance not being regulated, an MSP must consult a firm that specializes and understands the risks incurred and offers a holistic cover for their clients.
Speak with Ulistic today to learn more about our business development, MSP marketing, and sales services for managed IT service businesses.