Companies large and small – but especially small – are picking up on the increasing number of cyberattacks each year, as well as damage that is worsening in severity, and turning to cyber insurance policies for protection. A recent Marsh Risk Management Research report showed that in 2013, 21 percent more cyber insurance policies were purchased than in 2012.
Not only did the number of policies increase last year, but the amount purchased by individual companies also jumped. More companies opted for coverage with limits of $100 million or more, according to the study, “Benchmarking Trends: Interest in Cyber Insurance Continues to Climb.”
Small businesses are especially at risk of the devastating effects of cyberattacks, as they often don’t have the working capital to build a strong security infrastructure. However, owners can turn to nontraditional lenders like National Funding to get a small business loan to beef up security measures and purchase cyber liability insurance policies.
“Companies are looking beyond just privacy and at how technology or the failure of technology would impact their business,” said Bob Parisi, Marsh’s network security and privacy practice leader. They are looking for more business expense or business interruption coverage and buying a broader bucket of coverage.”
Cyber insurance policies typically offer more features at a cheaper cost than 10 years ago or so, and competition has been heating up, making the coverage more fiscally feasible. That is spurring more companies to seek out such policies, and experts expect that trend to continue in 2014.
Increased attacks call for action
Recent reports have documented the increased number of cyberattacks in recent years. Some experts blame the U.S. government for inaction that has led to the spikes. Advocates at the recent Cyber Security Summit hosted by First Data said that policies that would allow companies to share data with the government and other companies could significantly cut down on the risk, but until that happens, companies are being proactive and turning to insurance for protection.
“Business has been picking up as more businesses and organizations today realize that data breaches and cyber attacks can be quite expensive and that insurance is something they now need to consider since these incidents are happening much more fiercely and frequently,” Christine Marciano, of a New York-based risk agency focused on cyberspace, said to Insurance Business America.