Cyber Insurance And Compliance: Why MSPs Need Both

Published August 17, 2023
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Evan Pappas

Data security has become one of the top priorities for business owners today. But while it is easy to talk about, becoming secure can take a lot of work.

For businesses seeking data security, cyber liability insurance keeps them covered. 

But qualifying for insurance is becoming more difficult. To get clients insured, MSPs are addressing one of the major factors in data protection: compliance.

Keeping a client compliant with security frameworks can make qualifying for insurance easier. 

Why do MSPs Need Cyber Security Insurance?

As cyber attacks become more prevalent, MSPs of all sizes need to ask: why do we need insurance?

Cyber liability insurance helps MSPs and their clients recover from data breaches and cybercrime. Insurance supports business continuity and reduces the financial impact of a breach.

So, what type of coverage is included in cyber security insurance? 

  • Damage or monetary losses caused by ransomware
  • Data corruption 
  • Backup destruction 
  • and other types of cyber attack

Insurance compensates businesses for their losses to help with the recovery process. It provides access to security audits and investigations funding. With insurance, MSPs help clients avoid extended downtime. It also helps recover data, protect reputations, and prevent monetary losses. 

Cyber insurance helps clients avoid the worst consequences of a data breach. While it may not be possible to have 100% protection at all times, insurance covers the rare times when recovery is needed. 

Why do MSPs Need Compliance?

Becoming compliant allows both MSPs and their clients to improve their security standards as a part of their daily operation.

A compliance framework, like SOC 2 or ISO 27001, is a security standard that outlines how organizations should manage data. 

They outline the standards an organization must meet to be officially certified.

Certification helps clients meet other regulations as well. For example, the Health Insurance Portability and Accountability Act (HIPAA) regulates the privacy of health care information.

HIPAA compliance is required for any business that handles personal health information. 

Being compliant in SOC 2 will make it much easier to meet HIPAA standards. Staying compliant with security regulations prevents businesses from suffering penalties and legal issues. 

Businesses with strong security also become more competitive and attractive to potential customers.

MSPs also have the opportunity to boost revenue with compliance as a service. You can learn more about this here.

How Compliance Can Reduce Your Insurance Premiums

MSPs can earn reduced insurance premiums because of the high standard of compliance frameworks.

Doing so can save clients money and give peace of mind that they are getting the best value possible.

Reduced rates can be a huge benefit to clients because it lets them get compliant at a more affordable cost. They can get insured, and get lower premiums.

Here are some tips for reducing insurance premiums by leveraging compliance:

  1. Maintain Accurate Records: Accurate records not only help MSPs in the event of a claim, but also support clients in the event of a breach. MSPs should also keep accurate records of any changes in their coverage too.
  2. Inform Insurers of Changes: MSPs should notify their insurer of changes in their coverage. Failing to do so could lead to an increased risk of denied coverage in the event of a claim.
  3. Review Policy Documents: MSPs should also review their compliance policy documents on a regular basis. This will help to ensure that they are aware of any changes in their policy and can take advantage of any available discounts.

Start your compliance journey with ControlMap

ControlMap is ready to help you get started on your compliance journey. For more information on how ControlMap helps you follow the path to compliance with SOC 2 or other frameworks, book a demo today.

Simple Guidelines for Compliance

Below are simple guidelines that can help MSPs stay compliant with their insurance. Get compliant and take advantage of any associated discounts from insurers.

  1. Understand your policy: MSPs should review the terms and conditions of their policies. Make sure they understand any exclusions, as well as the specifics of their coverage.
  2. Make sure your coverage is up to date: MSPs should ensure their coverage up to date and they are not paying for any additional coverage they don’t need.
  3. Ensure your deductibles are up to date: Many insurers offer discounted premiums for MSPs who opt for higher deductibles. Making sure your deductibles are up to date can help you to take advantage of these discounts.
  4. Meet all requirements: MSPs should take note of all the discounts insurers offer. Pursue all applicable discounts your business qualifies for.

These simple guidelines let MSPs leverage compliance to boost their security posture.

Benefits of compliance and cyber liability insurance

Compliance with your insurance policy is essential. Following the guidelines outlined above can get MSPs reduced insurance premiums and save money in the long run. 

Keeping your policy updated can help you manage any deductibles and take advantage of relevant discounts.

Non-compliance with your insurance policy may lead to high premiums. Compliance violations could also void coverage, and bring additional legal and financial consequences. 

It’s important to familiarize yourself with relevant regulations and stay up to date with changes in your policy. By doing so, you can take advantage of any discounts and benefits that may be available to you.

Data security benefits for MSPs