The average cost for cyber insurance rose about five percent in 2019 despite the large increase in the number of attacks and claims files, a new report has found.
The five percent increase bumped up the average annual premium to $1,501 for a business facing moderate risks with liability limits of $1 million, a $10,000 deductible, and $1 million in company revenue. A recent IBM study found the average cost of responding to a data breach for U.S. firm is $8 million, although the total does depend greatly upon the size of the company.
Only about 20 percent of businesses have invested in cyber insurance.
Other factors also come in to play when determining premium levels, this includes the customer’s ability to protect itself from cyberattacks, the physical location of the facilities being covered along with more basic insurance factors such as total coverage selected and deductibles.
To make sure a potential customer is taking the proper precautions cyber insurance carriers are vetting customers based on their cybersecurity posture and charging those with poor cybersecurity practices higher premiums, said Mak. This assessment could include checking on the number of sensitive records stored by an organization, as well as the number of financial or credit card transactions processed by the company. Usually, the higher the number of sensitive records or financial transactions stored, the higher your company’s insurance premiums will be, said Mak.
Cyber insurance is also playing a role in the decision process on whether or not to pay a ransom. The last several months have seen several companies and municipalities opt to pay the ransom citing the fact that they were carrying cyber insurance and thus would only have to pay the deductible. Most recently the Rockville Center (NY) School District opted to pay an $88,000 ransom, joining Lake City, Fla. and Jackson County, Ga. among others that have caved in to their attacker’s demands.
About The Author: With over twenty-five years experience, Pat Thompson, CPCU, is a respected veteran of the property and casualty insurance industry. His commercial lines underwriting experience and independent agency ownership make him qualified to properly mitigate risk of any business.