Cyber Risk Grows as Hacking Becomes Common
If your company relies on digital technology (that’s just about everybody) you’re in danger of waking one morning to learn someone has meddled with your digital data.
Cyber crime is foremost in the news because international hackers supported by countries unfriendly to the United States, have directed enormous efforts to disrupt government, finance, and business. These activities have been effective – but are only the top of an iceberg of cyber crimes potentially impacting every server and computer in America.
According to the Insurance Journal. “standalone” cyber liability policies in 2016 (including package policies) amounted to nearly $2.5 billion in premiums. The article forecast cyber premiums will be 3 times that in just two more years!
If your business or organization depends on the Internet, and your computers and server are used to store personal and financial data of consumer and business-to-business customers, the compounding, rapid growth of cyber attacks should have you concerned.
Market projections from ISO Marketstance – Commercial Insight have the commercial cyber liability market growing in these ways:
- Small commercial companies (less than $10 million in revenue) will account for nearly $275 million in cyber premiums by 2020. Companies in this market segment will more than double from nearly 100,000 in 2016 to nearly 250,000 in 2020.
- Middle market companies ($10 million-$250 million in revenue) will account for $2.6 billion in cyber premiums. It’s predicted that companies in this segment will grow from 43,000 in 2016 to more than 83,000 in 2020.
- National accounts ($250 million or higher in revenue) will contribute $1.43 billion in cyber premiums. There were 6,000 companies in this segment in 2016. In 202, the number will be nearly 10,000.
This rapid growth in cyber liability premiums is due to the rapid evolution of cyber attacks. As more and more attacks happen to companies of all sizes, more companies are choosing to add cyber liability policies to their insurance portfolio.
It’s not just big international companies that are getting hacked. What about your business? Do you need it?
According to Lloyd’s of London, businesses of any size can be exposed to the risks of business interruption, income loss, damage management and repair, and possibly reputational damage if your computers and server equipment or systems fail or are interrupted.
A study by Lloyd’s, “Counting the Cost: Cyber Exposure Decoded” reveals the potential economic impact of two scenarios: a malicious hack that takes down a cloud service provider with estimated losses of $53 billion, and attacks on computer operating systems run by a large number of businesses around the world which could cause losses of $28.7 billion. By comparison, Superstorm Sandy, the second costliest tropical cyclone on record, is generally considered to have caused economic losses between $50 billion and $70 billion.
While existing commercial insurance policies may provide some elements of coverage against cyber attacks, businesses are increasingly buying specialized cyber insurance policies to supplement their existing insurance arrangements, particularly if they:
- Hold sensitive customer details such as names and addresses or banking information
- Rely heavily on IT systems and websites to conduct their business
- Process payment card information as a matter of course
Cyber insurance covers the losses relating to damage to, or loss of information from, IT systems and networks. Policies generally include significant assistance with and management of the incident itself, which can be essential when faced with reputational damage or regulatory enforcement.
Are you concerned about the costs to your business should you endure a cyber attack? A 15-20 conversation regarding the above topic will show you Van Beurden Insurance can help.