Is It Time To Add Cyber Security Insurance?

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A recent study found that 31% of companies have cybersecurity insurance policies, while 39% planned to purchase a policy in the future. Ponemon Institute, a data privacy and cybersecurity research firm, found that 70% of companies that have experienced a data breach said that experience increased their interest in cyber insurance. However, 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. And 44% of companies that do not have policies cite as their reason the fact that the policies contain too many exclusions, restrictions and uninsurable risks.

The White House has put forth a  loosely defined set of incentives designed to convince private companies to adopt the voluntary aspects of its so-called “Cybersecurity Framework.” At the top of the list is a proposed cybersecurity insurance market, which calls for the adoption of risk-reducing measures and risk-based pricing models. The program is set to launch in early 2014, but the details are still fuzzy.

The average “operational” cost of data breach in the U.S. is approximately $5 million, which generally includes four cost categories: (1) detection or discovery; (2) escalation, or reporting of the breach to appropriate personnel; (3) notification of those whose personal information was breached; and (4)after-the-fact response to minimize harm to victims, such as credit monitoring, issuing of new cards or accounts, etc.

Given the high cost of a data breach incident and the fact that these incidents are occuring with more frequency, it may be time to take a closer look at getting insurance coverage.

Topics:  Cybersecurity, Data Breach, Data Protection, Insurers

Published In: General Business Updates, Insurance Updates, Privacy Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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