More companies are turning to cyber insurance to protect their organizations from the financial consequences of a data breach or cyber attack, according to a report issued today by Marsh. The number of Marsh US clients purchasing cyber insurance increased 33% in 2012 over 2011, with those in the services and educational sectors leading the way.
Companies also are purchasing higher levels of cyber coverage, according to the report, Benchmarking Trends: More Companies Purchasing Cyber Insurance. Cyber insurance limits purchased in 2012 averaged $16.8 million across all industries, an increase of nearly 20% over 2011. Communication, media, and technology companies led all industries, both by average limits purchased - $33.4 million - and the rate of increase over 2011, which was nearly 36%.
"Awareness of cyber and privacy risks continue to grow, especially in the wake of a number of highly visible data breaches, hacking attacks, litigation, and increased government focus on cyber security," said Bob Parisi, Network Security and Privacy Practice Leader for Marsh. "As a result, companies are now looking to manage their day-to-day cyber risks in the same way they do more traditional risks-through the purchase of insurance."
According to the report, the services industry, which includes professional, business, legal, accounting, and personal services firms, experienced the largest uptick in the number of clients purchasing cyber insurance - a 76% jump over 2011. This was followed closely by the education sector, which experienced a 72% rise and financial institutions, which experienced a 32% rise.
Overall rates for cyber insurance were essentially flat in the fourth quarter of 2012, although market conditions varied significantly by company size, the report found.
Smaller companies, where demand is great and competition among insurers is strong, typically paid less for cyber coverage than larger companies, which are experiencing more severe and frequent claims.