According to sources cited this article, the cyber risk insurance market totals $600 million in premiums annually and is growing fast. Policies offer a variety of coverage, from direct losses associated with cyber theft, to remediation costs for the exposure of private data, to fines from regulators. However, the costs and benefits for small to medium sized businesses need to be carefully weighed. One source states, “Underestimating the costs of cyberattacks has been a major hurdle for insurance.” Another source cites their “concern that the claims for post-breach response are turning out to be more common and more expensive than carriers might have expected.”
Cyber risk insurance is more than a decade old, but is a rapidly expanding market. This year companies will take out around $600 million in premiums for cyber risk, according to estimates from Betterley Risk Consultants, a Sterling, Mass., consulting firm.
Like Ferma, small and midsize businesses that do little business online may find they are the targets of online thieves. While cyber risk insurance is generally sought out by those companies that fear a breach that exposes customer data, it can also help SMBs survive a catastrophic loss, experts say.
Some companies have already seen the benefits from such policies. Online criminals stole $35,000 from Brookeland Fresh Water Supply District earlier this year, but the organization’s bank recovered less than half of the money. But because Brookeland was insured, its insurance company paid all but a $500 deductible of the remaining losses, according to a recent report.
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