Considering cyber insurance? Here’s what you need to know

The growing need for cyber insurance

Fueled by the growing number of data breaches, an expanding attack surface and a shortage of cybersecurity talent, cyber risk is a mounting concern for organizations across all industries. A survey of risk managers by consultancy Allianz identified cyber incidents as the top-ranked business risk globally (tied with business interruption). This trend has changed tremendously in the past decade — nine years ago, cyber incidents were trailing in the No. 15 spot in the risk survey.

The costs of security incidents and data breaches are rising as well. The average cost per lost record increased from $148 in 2018 to $150 in 2019, with the average cost of a breach going from to $3.86 million to $3.93 million, according to annual reports on data breach costs by the Ponemon Institute and IBM. 

For some organizations, the results are devastating. In the last couple of years, we saw several companies shutting down or declaring bankruptcy as a result of a major data breach. One example was American Medical Collection Agency, whose breach led to compromised patient records at LabCorp, Quest Diagnostic and other healthcare providers.

Given these kinds of implications, it would seem prudent to turn to cybersecurity insurance to mitigate risk. Especially since the data-driven economy will continue to push the boundaries for how information systems connect and interact with each other — and with that, the risk will compound. 

Buying cyber insurance, however, is more challenging than other commercial policies. Below are some basic things to consider. 

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What is cybersecurity insurance?

A 2018 J.D. Power survey found that two-thirds of businesses combine their cyber-risk insurance with other policies rather than buying stand-alone coverage. However, don’t count on a general liability policy to cover your cyber risk. These (Read more...)