The term “cyber insurance” is quickly becoming a household phrase, plastered on more and more billboards, sprinkled throughout early morning radio commercials, and magically trolling you on your favorite websites. Early adopting businesses across the country are allotting more budgeted dollars to cyber liability insurance in hopes of assisting in a potential cyber incident. Overall, the cyber liability insurance market continues to develop and expand, but is your business on board?
In a new survey conducted by The Council of Insurance Agents & Brokers’, the average take up rate for cyber insurance is 24% across U.S. businesses. Although the number is rising, results show that small-to medium-sized business are still in the mindset that the size of their business will allow them to fly under the radar. We’ve previously discussed that this outlook may lead to even more damage to your business. Research by the Ponemon Institute shows the cost of a data breach has risen to an estimated $5.9 million.
As we've mentioned in a previous cyber security post, other expenses include:
Business Interruptions—cyber breaches often times force businesses to temporarily stop operations while investigations take place. This, in turn, causes decreases in profits, brand reputation, and customer/employee confidence.
Security Overhauls—once a breach occurs, your company may look into updating or implementing new security measures. Additional resources are spent on new software, instillation, and training.
Business Closures—unfortunately, for those who are not prepared, cyber-attacks can often lead to a complete shut-down of business operations. The time and resources spent trying to recuperate takes a large toll on the business’ finances.
Despite the massive educational challenge, the continuous news coverage and spotlight on cyber security is driving cyber liability insurance purchases for businesses of every size and across all industries. And it's showing no signs of letting up. Of those businesses that currently own basic coverage, 33% have sought additional coverage and some have gone as far as purchasing stand-alone cyber policies.
Like any new product, there will be some growing pains and kinks to work out as customers continue to feel out pricing and adjust to policy terms. Educating the customer will be the greatest task, leaving the burden to agents/brokers to update their clients on the latest coverages and conditions.