As more and more high-profile cyber attacks are identified, businesses are increasing their investment in cyber insurance
to help mitigate their risk exposure in the
event their data is hacked. According to
U.S.-based insurance broker Marsh in
its latest report, Benchmarking Trends:
Cyber Attacks Drive Insurance Purchases for New and Existing Buyers, client
spending on standalone cyber insurance
increased 32 percent for the first half of
2015. Pricing for cyber insurance also
increased — especially for industries that
have experienced significant cyber losses.
Across specific business lines, spending
grew significantly. Power and utility companies increased their growth rate 100
percent, nearly doubling their take-up
rates for the same period in 2014. Universities and other education-based institutions saw a growth rate of 155 percent — a
90 percent change in their cyber insur-
ance take-up rates over the previous year.
Marsh notes that “school settings are ripe
for cyber attacks due to the hefty amount
of student and staff personnel informa-
tion that is stored in a variety of places.”
Following the Anthem hack earlier this
year, spending by healthcare organiza-
tions increased to 41 percent in 2015, up
from 37 percent in 2014. Based on the
type of information health care provid-
ers hold, they are prime targets for cyber
criminals who understand the oppor-
tunities shared data exposures present.
There are also threats that exist because of
individuals filing false healthcare claims
with stolen data.
The hospitality and gaming indus-
tries, as well as the financial sectors ex-
perienced a 5-8 percent increase in cyber
purchases for the first half of 2015 too.
While financial institutions are already
targets of cyber attacks, a new warning
from Standard & Poor’s stated that banks
could run the risk of having credit ratings
downgraded if an organization is unpre-
pared for a cyber incident.
In the communications, media and
technology (CMT) sector, companies
with revenues over $1 billion purchased
50 percent more cyber coverage for the
first six months of 2015 ($55.8 million)
than during the same period in 2014 ($38
million). More sophisticated attacks have
prompted companies in the CMT sector
to escalate cyber spending, with companies purchasing an average of $18.1 million in cyber limits.
The retail sector, which has already
seen a number of high-profile cyber attacks at Home Depot, Target, Michaels,
and Lord & Taylor, experienced a 32 percent rise in the cost of cyber insurance.
The average price increase was 19 percent
for other business sectors. Healthcare
firms experienced rate increases similar
to the retail sector because of changes in
the program structure, especially in the
area of managed care.
The high-profile cyber breaches have
gotten the attention of businesses, which
are now being far more proactive in
their risk management strategies. Corporate leaders recognize that it is no longer just an IT problem and that the most
effective programs are implemented
According to Marsh, it is vital for organizations to assess their vulnerabilities,
determine how they would respond in
an actual cyber breach, and be proactive
in preparing for this eventuality. Network
security firm, FireEye, says attackers are
quick to adapt as businesses change their
cyber strategies. Companies are learning
sooner if there has been a breach, but FireEye says hackers continue to utilize new
techniques for each phase of an attack.
While overall capacity in the market
is abundant at $500 million per risk, on
average, large companies purchased only
$30.4 million in coverage limits during
the first half of 2015.
More Businesses are Using
Insurance to Manage their
By Patricia L. Harman