The cost of cyber insurance is soaring — up 79% from the beginning of 2022 — leaving healthcare leaders scrambling to find budget and prove the ROI of their IT investments or be faced with making trade-offs that could open their organizations up to potential breaches. With the healthcare sector being a prime target for cyberattacks, insurance premiums are rising fast, and coverage is often decreasing. The right strategies can help mitigate these costs by improving your organization’s cybersecurity posture and demonstrating a solid return on IT investments.
Why is the cost of cyber insurance rising?
In recent years, the cost of cyber insurance for healthcare organizations has surged significantly. Insurance premiums are climbing due to increased claims, tighter underwriting standards, and the growing complexity of cyber threats. Cyber insurance companies are now conducting thorough audits to assess risks and determine premiums, resulting in more extensive and stringent application processes.
A key factor driving the rise in premiums is the increasing volume and sophistication of cyberattacks, particularly ransomware, targeting the healthcare sector. Since healthcare organizations store vast amounts of sensitive data, it makes them a prime target. With the frequency, severity and complexity of these incidents escalating, it has resulted in higher payouts for claims, contributing to great financial losses for insurers and ultimately prompting them to raise premiums to mitigate risk.
How to Reduce Cyber Insurance Costs
Coverage is shrinking and prices are going up, leaving many healthcare organizations in a tough spot. These rising costs aren’t just a financial burden — they’re a wake-up call to reevaluate your cybersecurity strategies.
However, there are actionable strategies healthcare leaders can implement to meet these demands and reduce premiums.
By improving your organization’s cybersecurity maturity, demonstrating a clear return on investment (ROI) from your IT spending, and leveraging the expertise of managed service providers (MSPs), you can strengthen your security posture while keeping insurance costs under control.
Benchmark Your Maturity
Improving cybersecurity maturity is one of the most effective ways to lower cyber insurance premiums. Insurers offer lower premiums to organizations that demonstrate robust cybersecurity practices, which puts emphasis on the following pillars of IT maturity:
- Technology Infrastructure: A strong, scalable foundation of hardware, software, and network systems is essential to achieving IT maturity.
- Processes and Workflows: Well-structured IT processes, following frameworks like ITIL or COBIT, promote consistency and high-quality service delivery.
- Skill Sets and Competencies: Teams that combine technical proficiency with business acumen play a crucial role in advancing IT maturity.
- Alignment with Business Goals: True IT maturity is defined by the seamless integration of IT investments and operations with the organization’s broader business objectives.
To assess where your organization currently stands, start by conducting a comprehensive audit of your technology, processes, and workforce capabilities. This audit will help you identify gaps, prioritize improvements, and measure progress over time.
Once you have a clear understanding of your IT maturity, you can then focus on measuring the financial impact.
Conduct a Cost Analysis to Demonstrate ROI
The next step is to analyze your IT investments to demonstrate a strong ROI — a critical factor in justifying cybersecurity spend to increase maturation, which can further reduce your cyber insurance premiums.
Let’s take a look at a cost analysis exercise to consider when demonstrating the ROI of your IT investments. This analysis involves evaluating how investments in IT and cybersecurity translate into tangible financial benefits and risk reductions.
- Start by identifying and listing all IT-related investments, such as advanced cybersecurity tools, network infrastructure upgrades, and managed IT services. Quantify the total costs associated with these investments, including initial capital expenditures, ongoing operational costs, and labor costs if not outsourced.
- Assess how these IT investments contribute to risk reduction. For example, calculate the reduction in the likelihood of a cyber incident due to enhanced security measures, and estimate the cost savings from quicker detection and response. These calculations can help demonstrate the financial impact of reduced breach risks and minimized downtime.
- Determine the costs that have been avoided due to these IT investments. This might include potential breach costs, legal fees, regulatory fines, and reputational damage. Also, evaluate the financial impact of reduced downtime, using the average cost of downtime per hour and the reduction achieved through IT investments.
- Compare the results against industry benchmarks or historical data to validate the effectiveness of the IT investments. Present a comprehensive ROI report that includes total investment costs, quantified benefits, and a final ROI calculation.
For instance, if an organization invested $500,000 in cybersecurity and achieved $1,200,000 in avoided costs and productivity gains, the ROI would be 140%. This kind of analysis clearly shows the value of IT investments in terms of financial returns and risk management.
Leveraging MSPs to Optimize Cybersecurity
Managed service providers like ISG Technology are uniquely positioned to help healthcare organizations get the most out of their IT investments by streamlining processes, overseeing technology, and helping prove out ROI. Managed IT services:
- Provide access to a team of cybersecurity experts who are well-versed in the latest threats and technologies
- Support continuous monitoring, which can play a crucial role in detecting and responding to threats in real time, therefore minimizing the risk of breaches
- Ensure that cybersecurity measures are always up to date
This 24/7 protection ensures that your organization’s cybersecurity program stays mature, helping you pass insurance audits with flying colors and secure lower premiums. According to Forbes, insurers value this partnership because it can reduce the risk of cybersecurity incidents, which in turn can lead to lower premiums for your organization.
“It’s similar to taking your car to a certified dealer rather than an uncertified mechanic — it might cost more initially, but the job is done faster and with fewer mistakes,” explained ISG’s Regional VP Walter Hirsekorn, on the benefits of working with MSPs.
Additionally, MSPs typically offer predictable monthly costs, making it easier for organizations to budget for cybersecurity expenses. This cost predictability allows for more effective financial planning and helps avoid unexpected costs associated with maintaining an in-house team. By relying on the expertise of a MSP, healthcare leaders can focus on their core activities and strategic goals, allocating resources more effectively.
Lower Costs and Increase Maturity with the Right Partner
Rising cyber insurance costs don’t have to be a burden for healthcare organizations. By taking the right actions, you can position your organization for lower premiums and stronger cybersecurity. To recap, here are three key steps you can take to mitigate these costs:
- Improve Cybersecurity Maturity: Invest in advanced tools and systems that detect and respond to threats effectively. A mature cybersecurity posture can lead to lower insurance premiums.
- Partner with Managed Service Providers (MSPs): Working with a MSP like ISG Technology can offload the burden of maintaining a mature IT program, managing cybersecurity tools and labor costs, while improving efficiency and protection.
- Demonstrate ROI on IT Spending: Focus on key performance indicators (KPIs) such as response times and downtime to show a strong return on your IT investments.
Reach out to ISG Technology today to learn how we can support your organization in managing cybersecurity risks and getting the most ROI for your IT investments.