It’s official: cyber insurance is the fastest growing coverage in America, but that’s not exactly a surprise, is it? More small, medium and large sized organizations are becoming aware of the potential impacts of a cyber breach and the need for insurance coverage that protects personal information. Recent cyber incidents, including the Yahoo hack that affected more than 1 billion user accounts, the Madison Square Garden data breach, and the KFC loyalty program attack, have all highlighted the increasing scope and sophistication of modern cyber criminals.
There are now more than 60 insurance companies offering standalone cyber insurance policies in America. According to analysts at PricewaterhouseCoopers, the corporate cyber insurance market in the country is currently worth more than $3 billion annually and is expected to grow to more than $7.5 billion in premiums by 2020.
Research also shows that cyber breaches are becoming more expensive for an organization affected: the average breach in 2016 cost $7 million, which represents the third-costliest business risk this year.
Some carriers have doubled their cyber book year over year and as demand increases, insurance providers are putting up prices. Insurance analysts have seen prices rise between 5 - 10% in the past year, but for large organizations or those with specific exposures, that price could jump even higher. Insurance carriers are putting a lot of resources into adapting to the constant flow of new hacking tactics and exposures, but it’s not an easily won battle.
By their very nature, cybercriminals perpetrate their crimes away from the gaze of mainstream society and are often protected by layers of high-tech encryption and technology. Many choose to receive payment via the world’s fastest growing currency –bitcoin – which allows for online anonymity. The changing nature of crimes, targets and exposure values make it increasingly difficult to defend against and assess the possible next moves in the cybercrime world.
All of this activity means that experienced cyber insurance underwriters are in high demand and, according to NetDiligence, the average payout from an insurance company is $665,000.
2016 was a record breaking year in the cyber insurance space, and while no one can be sure which direction hackers will turn next, one thing is quite certain: demand in 2017 is going to be even greater.
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