We are excited to announce our cyber risk partnership program with leading cyber insurance carriers and incident response providers to help our customers reduce their cyber risk. Cloudflare customers can qualify for discounts on premiums or enhanced coverage with our partners. Additionally, our incident response partners are partnering with us for mitigating under attack scenarios in an accelerated manner.
What is a business’ cyber risk?
Let’s start with security and insurance — e.g., being a homeowner is an adventure and a responsibility. You personalize your home, maintain it, and make it secure against the slightest possibility of intrusion — fence it up, lock the doors, install a state of the art security system, and so on. These measures definitely reduce the probability of an intrusion, but you still buy insurance. Why? To cover for the rare possibility that something might go wrong — human errors, like leaving the garage door open, or unlikely events, like a fire, hurricane etc. And when something does go wrong, you call the experts (aka police) to investigate and respond to the situation.
Running a business that has any sort of online presence is evolving along the same lines. Getting the right security posture in place is absolutely necessary to protect your business, customers, and employees from nefarious cyber attacks. But as a responsible business owner/CFO/CISO, nevertheless you buy cyber insurance to protect your business from long-tail events that could allow malicious attackers into your environment, causing material damage to your business. And if such an event does take place, you engage with incident response companies for active investigation and mitigation.
In short, you do everything in your control to reduce your business’ cyber risk by having the right security, insurance, and active response measures in place.
The cyber insurance industry and the rise of ransomware attacks
Over the last two years, the rise of ransomware attacks has wreaked havoc on businesses and the cyber insurance industry. As per a Treasury Department report, nearly 600 million dollars in banking transactions were linked to possible ransomware payments in Suspicious Activity Reports (SARs) filed by financial services firms to the U.S. Government for the first six months of 2021, a jump of more than 40% over the total for all of 2020. Additionally, the Treasury Department investigators identified about 5.2 billion dollars in bitcoin transactions as potential ransomware payments, indicating that the actual amount of ransomware payments was much higher1.
The rise of these attacks has and should make businesses more cautious, making them more inclined to have the right cybersecurity posture in place and to buy cyber insurance coverage.
Further, the rising frequency and severity of attacks, especially ransomware attacks, has led to increasing insurance claims and loss ratios (loss ratios refers to insurance claims i.e., how much insurance companies pay out in claims costs divided by total earned premiums i.e., how much customers pay them for insurance) for the cyber insurers. As per a recent research report, the most frequent types of losses covered by cyber insurers were ransomware (41%), funds transfer loss (27%), and business email compromise incidents (19%). These trends are pushing legacy insurance carriers to reevaluate how much coverage they can afford to offer and how much they have to charge clients to do so; thereby, triggering a structural change that can impact the ability of companies, especially the small and medium businesses, to minimize their cyber risk.
The end result has been a drastic increase in the premiums and denial rates over the last 12 months amongst some carriers, which has pushed customers to seek new coverage. The premiums have increased upwards of 50%, according to infosec experts and vendors, with some quotes jumping closer to 100%.2 Also, the lack of accessible cyber insurance and proper coverage disproportionately impacts the small and medium enterprises that find themselves as the common target for these cyber attacks. According to a recent research report, 70% of ransomware attacks are aimed at organizations with less than 1,000 employees.3 The increased automation of cyber attacks coupled with the use of insecure remote access tools during the pandemic has left these organizations exposed all while being faced with increased cyber insurance premiums or no access to coverage.
While some carriers are excluding ransomware payments from customers’ policies or are denying coverage to customers who don’t have the right security measures in place, there is a new breed of insurance carriers that are incentivizing customers in the form of broader coverage or lower prices for proactively implementing cybersecurity controls.
Cloudflare’s cyber risk partnerships
At Cloudflare, we have always believed in making the Internet a better place. We have been helping our customers focus on their core business while we take care of their cyber security. We are now going a step further, helping our customers reduce their cyber risk by partnering with leading cyber insurance underwriters and incident response providers.
Our objective is to help our customers reduce their cyber risk. We are doing so in partnership with several leading companies highlighted below. Our customers can qualify for enhanced coverage and discounted premiums for their cyber insurance policies by leveraging their security posture with Cloudflare.
Insurance companies: Powered by Cloudflare’s security suite, our customers have comprehensive protection against the most common and severe threat vectors. In most of the cases, when attackers see that a business is using Cloudflare they realize they will not be able to execute a denial of service (DoS) attack or infiltrate the customer’s network. Knowing the power of Cloudflare, the attackers prefer to spend their time on more vulnerable targets. This implies that our customers face a lower frequency and severity of attacks — an ideal customer set that could imply a lower loss ratio for underwriters. Our partners understand the security benefits of using Cloudflare’s security suite and are letting our customers qualify for lower premium rates and enhanced coverage.
Cloudflare customers can qualify for discounts/credits on premiums and enhanced coverage with our partners At-Bay, Coalition, and Cowbell Cyber.
“An insurance policy is an effective tool to articulate the impact of security choices on the financial risk of a company. By offering better pricing to companies who implement stronger controls, like Cloudflare’s Comprehensive DDoS Protection, we help customers understand how best to reduce risk. Incentivizing our customers to adopt innovative security solutions like Cloudflare, combined with At-Bay’s free active risk monitoring, has helped reduce ransomware in At-Bay’s portfolio 7x below the market average.”
– Rotem Iram, Co-founder and CEO, At-Bay“It’s incredible what Cloudflare has done to create a safer Internet. When Cloudflare’s technology is paired with insurance, we are able to protect businesses in an entirely new way. We are excited to offer Cloudflare customers enhanced cyber insurance coverage alongside Coalition’s active security monitoring platform to help businesses build true cyber resilience with an always-on insurance policy.”
– Joshua Motta, Co-founder & CEO, Coalition“We are excited to work with Cloudflare to address our customers’ cybersecurity needs and help reduce their cyber risk. Collaborating with cybersecurity companies like Cloudflare will definitely enable a more data-driven underwriting approach that the industry needs”
– Nate Walsh, Head of Strategic Partnerships, Corvus Insurance“The complexity and frequency of cyber attacks continue to rise, and small and medium enterprises are increasingly becoming the center of these attacks. Through partners like Cloudflare, we want to encourage these businesses to adopt the best security standards and proactively address vulnerabilities, so they can benefit from savings on their cyber insurance policy premiums.”
– Jack Kudale, Founder and CEO, Cowbell Cyber
Incident Response companies: Our incident response partners deal with active under attack situations day in, day out — helping customers mitigate the attack, and getting their web property and network back online. Many times, precious time is wasted in trying to figure out which security vendor to reach out to and how to get hold of the right team. We are announcing new relationships with prominent incident response providers CrowdStrike, Mandiant, and Secureworks to enable rapid referral of organizations under attack. As a refresher — my colleague, James Espinosa, wrote a great blog post on how Cloudflare helps customers against ransomware DDoS attacks.
“The speed in which a company is able to identify, investigate and remediate a threat heavily determines how it will fare in the end. Our partnership with Cloudflare provides companies the ability to take action rapidly and contain exposure at the time of an attack, enabling them to get back on their feet and return to business as usual as quickly as possible.”
– Thomas Etheridge, Senior Vice President, CrowdStrike Services“As cyber threats continue to rapidly evolve, the need for organizations to put response plans in place increases. Together, Mandiant and Cloudflare are enabling our mutual customers to mitigate the risk breaches pose to their business operations. We hope to see more of these much-needed technology collaborations that help organizations address the growing threat of ransomware and DDoS attacks in a timely manner.”
– Marshall Heilman, EVP & Chief Technology Officer, Mandiant“Secureworks’ proactive incident response and adversarial testing expertise combined with Cloudflare’s intelligent global platform enables our mutual customers to better mitigate the threats of sophisticated cyberattacks. This partnership is a much needed approach to addressing advanced cyber threats with speed and automation.”
– Chris Bell, Vice President – Strategic Alliances, Secureworks
In summary, Cloudflare and its partners are coming together to ensure that our customers can run their business while getting adequate cybersecurity and risk coverage. However, we will not stop here. In the coming months, we’ll be working on creating programmatic ways to share threat intelligence with our cyber risk partners. Through our Security Center, we want to enable our customers, if they so choose, to safely share their security posture information with our partners for easier, transparent underwriting. Given the scale of our network and the magnitude and heterogeneity of attacks that we witness, we are in a strong position to provide our partners with insights around long-tail risks.
If you are interested in learning more, please refer to the partner links (At-Bay, Coalition, and Cowbell Cyber) or visit our cyber risk partnership page. If you’re interested in becoming a partner, please fill up this form.
Gallagher, Cyber Insurance Market Update, Mid-year 2021