Will Your IT Company Be Around Next Year? A Look at What Cybersecurity Insurance Will Look Like in 2021.

Will Your IT Company Be Around Next Year? A Look at What Cybersecurity Insurance Will Look Like in 2021.

With the many uncertainties of 2020, organizations worldwide hope for consistency and reliability as we head into 2021. This year, the COVID-19 global pandemic has reshaped the country's perspective and the world at large, sparking many companies to shift towards conservative and defensive business strategies as they head into the new year.  

When it comes to your current IT Company, it's essential to consider whether they will be around by the end of 2021. Consistent support from your IT Company (or "IT Guy") will be a crucial ingredient to survival and longevity in the post-pandemic economy. Several components play into whether IT Companies will survive the rest of 2020 and exist thru 2021. 

The issue is that Cybersecurity insurance has gotten harder to obtain. 

First -- why do you care if your IT Company has Cybersecurity Insurance? 

You expect your CPA to have errors and omissions coverage and your doctor to have malpractice insurance -- what about your IT Company? They're deeply connected to your business's infrastructure and should carry the proper insurance. The difference is the lack of regulation in the IT industry right now. The barrier to entry is low for calling yourself an IT Company. However, the less secure IT Companies and IT Guys have a tough time getting properly insured.

With the increasing complexity of the IT security landscape (which we will cover in the remainder of this blog), many of these IT Companies and IT Guys will likely no longer qualify for Cybersecurity insurance by the end of 2021 (assuming they qualified in 2020). Without proper insurance, a single security event could put both you and the IT Company out of business.

Regarding the security landscape, IT Companies (specifically, managed service providers) are being targeted and compromised more than ever before. If you hack an IT Company, you likely have remote access to all their clients' infrastructure. Why hack 50 small businesses when you can hack one? 

Because of this, Cybersecurity insurance for IT Companies is getting harder to obtain and afford. Here's why this may be a problem for your IT Company:

  1. Insurance companies are raising rates due to having to pay out due to IT Company Security incidents.
  2. Insurance companies are canceling or not renewing current policies for high risk IT providers.
  3. Underwriters are starting to ask tough questions and require certifications, etc., to renew current policies.
  4. Some insurance companies require a minimum of 5 years of experience, posing a problem for relatively "young" IT Companies.
  5. Insurance companies are requiring IT Company clients to be under contracts they help write to minimize liabilities.

So what does this mean for the future of many IT Companies? 

It's very simple: there will be fewer IT Guys and IT Companies due to cybersecurity incidents if they cannot acquire cybersecurity insurance. 

As a business owner, read this if you read nothing else: ensuring that your IT Company has active Cybersecurity insurance heading into 2021 will be a key to your success and survival as an organization. In short, make sure your IT Company is operating "the right way": with current and full coverage cybersecurity insurance so that your organization is fully protected in the case of a cybersecurity attack on either your IT Company or your business. With an unprecedented amount of attacks on IT Companies disclosed this year, this point is vital. If they are not operating with active cybersecurity insurance and are attacked, you will not be covered

As we close out an unprecedented year and head into a new one, organizations need to be defensive regarding their IT security strategy. Ask your IT Company the tough questions. Ensure they have cybersecurity insurance to protect you

Asking these questions could well be the difference between your organization succeeding and protecting itself in 2021...or not. 

Questions about cybersecurity insurance and protection for your organization? Curious about receiving a quote for IT services from PK Tech for 2021? Get in touch here