More companies are turning to Cyber insurance to protect themselves from the financial consequences of a data breach or cyber attack, as concern over the consequences of an assault grows, a new report from insurance broker Marsh says.
Based on figures in Marsh’s FINPRO practice, the broker says 33 percent more clients opted for cyber-liability insurance in 2012 compared to 2011.
All seven of the sectors Marsh measured showed increased interest in the coverage. Of the seven, services—which covers professional, business, legal, accounting and personal—and education led all others with a more than 70 percent increase in cyber-liability purchases in 2012 compared to the year prior. Healthcare had the lowest increase at just over 20 percent.
Interest has climbed because buyers view cyber insurance as an essential component of their insurance portfolios in the wake of a number of highly visible data breaches and hacking attacks, says Marsh. For small- and mid-size entities concerned with the costs of a data breach, insurance has become more affordable and coverage offers more service options such as loss-prevention and breach-response services. Underwriters have also simplified their guidelines, making purchases easier.
Network Security and Privacy Practice Leader for Marsh, Bob Parisi, says just within the past two years educational institutions have become cognizant of their exposure to cyber liability and are catching up to other institutions in terms of cyber-insurance coverage.
As for the services sector, he believes the increase is a combination of carriers making it easier to purchase and making it more affordable.With the interest in cyber insurance climbing last year, so too did the amount of total limits for all industries. The average limit purchased was close to $17 million, up 20 percent from the prior year. Leading the seven sectors was communications, media and technology with $33 million in limits, up 26 percent. For companies with revenues of more than $1 billion, the average total limit rose 30 percent from 2011 to $28 million. Some organizations purchased limits in excess of $150 million with one as high as $200 million in 2012.
“It is a very personal decision,” says Parisi, noting that typically the purchase is based on risk appetite and company revenue.
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