31% of companies have cybersecurity insurance policies, while 39% planned to purchase a policy in the future

31% of companies have cybersecurity insurance policies, while 39% planned to purchase a policy in the future


Source : C. M. MATTHEWS Wall Street Journal

A new study found that 31% of companies have cybersecurity insurance policies, while 39% planned to purchase a policy in the future. The study, released Wednesday by information services group ExperianEXPGY -0.69% plc, underscores the quick development of the nascent industry, which has picked up speed in recent years as companies wake up to a pervasive cyber threat.
“There is a definite expansion of cyber insurance, and growing interest in it,” said Michael Bruemmer, vice president at Experian Data Breach Resolution.
Mr. Bruemmer said that an increasing amount of his business now comes from insurers that pay for a company’s costs incurred during a breach. According to Mr. Bruemmer, 30% of his business now comes from insurers, which marks a 50% increase over the last 18 months.
According to the study, which was conducted by the Ponemon Institute, a data privacy and cybersecurity research firm, 70% of companies that have experienced a data breach said that experience increased their interest in cyber insurance. That is, perhaps, not surprising, as breaches can be costly affairs.
Past research by the Ponemon Institute found that the average “operational” cost of data breach in the U.S. is approximately $5 million. That study considered four cost categories: detection or discovery; escalation, or reporting of the breach to appropriate personnel; notification of those whose personal information was breached; and after-the-fact response to minimize harm to victims, such as credit monitoring, issuing of new cards or accounts, etc.
Wednesday’s study found that many policies cover expenses incurred during and after a breach. According to the study, companies said 86% of policies covered notification costs, 73% covered legal defense costs, 64% covered forensics and investigative costs, and 48% covered replacement of lost or damage equipment. Not everything was always covered though, as companies said only 30% of policies covered third-party liability, 30% covered communications costs to regulators, and 8% covered brand damages.
Most companies also seemed to think that the policies were properly priced, as 62% said the cost of premiums is fair. According to the study, 44% said they would be extremely likely to recommend their insurance provider to a friend or colleague.
But the study also found that some companies are still skeptical about cyber insurance, with 33% saying their company has no interest in purchasing a policy at this time. For those who have not purchased a policy, the biggest barrier was cost: 52% said premiums are too expensive. The study also found that 44% of companies that do not have policies cite as their reason the fact that yhe policies contain too many exclusions, restrictions and uninsurable risks.
Ponemon drew on 638 surveys completed by risk management professionals across multiple business sectors that have considered or adopted cyber insurance for the study.


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