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The Increased Need for Cyber Liability Insurance from The Reis Group

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The Increased Need for Cyber Liability Insurance

by Allison Teetsel on Dec 22, 2012

From celebrities such asScarlett Johansson and Mila Kunis, to multinational corporations likeYahoo!, it seems no one is immune to internet security breaches. Even theUS Senate has been targeted by hackers. Forbes magazine dubbed Summer 2012 the “Summer of Hackers”, with companies like LinkedIn, eHarmony and DropBox all falling victim to cyber attacks that exposed the private information for millions of user accounts. With such breaches becoming increasingly common, it is more important than ever for businesses to protect themselves with cyber liability insurance.

Why Invest in Cyber Liability Insurance?

According to the2012 Cost of Cyber Crime Study: United States, conducted independently by the Ponemon Institute:

      • Cyber crimes continue to be costly, with the average cost of cyber crimes for organizations included in the study at $8.9 million per year.

      • Cyber attacks have become common occurrences. The companies in the study experienced 102 successful attacks per week and 1.8 successful attacks per company per week—a 42% increase over last year!

      • The average time to resolve a cyber attack was 24 days, with an average cost to participating organizations of $591,780. The longer it takes to resolve the breach, the more costly it tends to be.

      • When a security breach occurs, your brand's reputation is at stake, in addition to privacy and assets.

      • Cyber attacks and security breaches affect all industries.

Cyber liability coverage allows your business to recoup some of the financial resources that are lost during a breach. Many cyber liability policies also cover public relations expenses to help your business recover as quickly as possible.

The causes of internet security breaches range from human error to malicious code, unauthorized access, and theft of digital assets. Whether an employee accidentally sends sensitive information to the wrong recipient, or a hacker gains unauthorized access to your computer system, seizing customer data, this sort of security breach can be devastating.

Cyber Risk by the Numbers

  • Cyber risk is the #1 concern among business owners1

  • Only 52% of companies dedicate resources toward reducing their cyber risk1

  • 65% of public companies forgo cyber insurance1

  • 232 million: the number of data records containing personal information that were stolen or compromised globally in 20112

  • 23 million the number of stolen or compromised records related to people in the United States.2

Most standard business liability insurance policies do not cover loss of customer or employee data. Those policies that offer general liability and directors and officers liability may provide some degree of coverage, but oftentimes, significant gaps in coverage are discovered after an attack or security breach. Don't wait until your business is affected by a cyber attack or security breach—contact your local insurance representative to discuss your options for cyber liability today!

 


1Chubb 2012 Public Company Risk Survey

2Insurance Journal: Munich Re Study Focuses on Rising ‘Cyber Crime’, November 29,2012

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