Cyber Insurance Gaining Momentum as Infosec Becomes an Enterprise Issue


With growing maturity companies are increasingly recognizing IT security has been elevated to being an enterprise issue rather than just a technology issue. Today when cyber attacks happen the repercussions are no longer limited to technology itself. Sachin Jain, CIO and CISO, Evalueserve draws attention to the fact that when the recent attacks on Target and Ashley Madison happened, the blame was not restricted to the CIO/CTO alone but encompassed the CEO and the management as well with heads rolling at the top. In both the cases the CEO had to step down and there was a huge dent made into their reputation and brand value.

 

“Today when a cyber attack happens its impact is not limited to just one piece of function within the organization. It impacts it entirely,” explains Jain. This clearly puts IT/cyber risk under the umbrella of enterprise issue.

 

One of the interesting outcomes of this recognition as an enterprise issue is insuring of cyber risk. More and more organizations are buying or are considering buying insurance policy to cover their cyber risks. They are seeking coverage for losses through data breaches. Evalueserve is one such organization. According to Jain, the company is thinking of taking a separate insurance coverage keeping cyber security in mind.

 

Another instance, though global, is Target which reportedly had $100 million in network security insurance. As of February 1, 2014, Target said of the $61 million in expenses related to the data breach during the fourth quarter 2013, some $44 million was offset by insurance.

 

According to U.S. based insurance broking and risk management company, Marsh, as cyber concerns broaden there has been a rise in insurance purchases. Increasing frequency and severity of cyber losses is driving demand for cyber insurance and purchases of higher limits, it further adds.

 

As per the company’s data, the number of US-based Marsh clients purchasing standalone cyber insurance increased 32% in 2014 over 2013. The cyber take-up rate — the percentage of existing Marsh financial and professional liability clients that purchased cyber insurance — rose to 16%. Early evidence in 2015 suggests a continued acceleration in the demand for cyber insurance.

 

These numbers are indicative of the rising trend towards cyber insurance. And, though the numbers may be far lesser in the still maturing Indian market, the momentum is definitely building up. While the trend for seeking financial protection through insurance is already catching up among larger organizations, the acceptance is gradually gaining momentum among their smaller counterparts as well.

Categories: Technology

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