Cyber-Security Insurance Adoption Grows
Less the a third of companies are insured against data breaches, but a growing number of companies are exploring policies, a new study shows.Businesses are beginning to rank cyber-security risks as greater than natural disasters and other major business risks, and while only 31 percent of companies are insured against data breaches, a growing number of companies are exploring policies, according to the findings of a survey by Experian Data Breach Resolution and the Ponemon Institute. Security exploits are greater than or equal to a natural disaster, business interruption, fire or other disaster, according to 76 percent of respondents. However, on average, respondents say there is a 9 percent likelihood that their companies will experience the predicted maximum financial impact during a data breach. "Companies worry about the financial impact following a data breach," Larry Ponemon, chairman and founder of the Ponemon Institute, said in a statement. "Cyber-insurance could be an important part of a risk management strategy to protect against potentially severe financial losses." Respondents quantified the average potential maximum financial risk of a data breach at $163 million, with some projecting more than $500 million in damages. Of the 56 percent that had breaches, they reported an average cost of these incidents as $9.4 million in the last 24 months.
"We are reaching a tipping point where the majority of companies we surveyed now rank cyber-security risks as high as other major insurable business risks," Michael Bruemmer, vice president at Experian Data Breach Resolution, said in a statement. "We anticipate that demand for cyber-security insurance is likely to increase in response to evolving breach response policies."