Testifying before a Senate committee last week, Peter Beshar—Marsh executive vice president and general counsel—revealed that the number of clients purchasing stand-alone cyber insurance increased by more than 20% in 2013.
Thanks to the increased focus on cyber security, many new underwriters have entered the space, driving down prices and benefitting sales, Beshar said. Prices across several business sectors, including utilities, financial institutions and sports and entertainment decreased last year, increasing uptake among businesses.
And of course, highly publicized data breaches like the December hacking of Target have helped boost sales, says Christine Marciano, president of Cyber Data-Risk Managers—a New York agency focused solely on the cyber space.
“Business has been picking up as more businesses and organizations today realize that data breaches and cyber attacks can be quite expensive and that insurance is something they now need to consider since these incidents are happening much more fiercely and frequently,” she said.
Marciano also noted that while her client base has been widening, employers from the technology service provider and healthcare markets are coming through her doors in increased numbers, thanks to contractual indemnification requirements as well as simple understanding of their increased risk.
Her experience tallies with Marsh’s. According to Beshar’s testimony, the highest rates of take up for cyber insurance were in healthcare, education and financial services last year.
“These industries handle a large volume of sensitive personal information, including healthcare data, Social Security numbers and credit-card information,” he said.
Even small businesses are at a risk, given their increased use of mobile payment technology. According to a recent LexisNexis survey, the number of mobile merchants in the US has increased by 50%, exposing client data to serious fraud and hacking risks.
In these instances, however, producers may have to work a bit harder to make the sale. According to David Derigiotis, head of the Professional Liability Center for Excellence for Burns & Wilcox, small business “do not think they’re a target.”
“And that’s just not the case,” he warned. “They are vulnerable and they are a huge target because their operations are generally not sophisticated enough to properly safeguard the organization.”
Cyber liability policies for a small business can come for as little as $500 annually, Derigiotis noted. Given the coverage offered in that policy, that’s an especially good deal.
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