As the hype over high profile data breaches subsides for a while, the premiums for coverage have fallen.
Cyber insurance companies have responded to a lull in the occurrence of high profile hacks by slashing the rates they are charging to businesses such as health care companies and retailers to cover them against data breaches.
This trend has been continuing throughout the first quarter of the year and has prompted insurers to cut rates.
Over the last handful of years, particularly over the last couple, there have been some extremely high profile data breaches among certain companies, government agencies and organizations that had previously held the reputation of impenetrability. The headline hacks of Anthem Inc, Target Corp and Home Depot, Inc., sent the premiums for cyber insurance continually skyward over many consecutive quarters. The average price being offered to high-risk industries for insurance coverage of $1 million fell by 13 percent throughout the first three months of this year, according to Marsh, the insurance broker unit of Marsh & McLennan Cos Inc.
This brought the average high-risk industry annual cyber insurance premiums down to $18,756.
This, following the average increase that occurred throughout 2015, which was 28 percent. Comparable policyholders in similar industries such as healthcare and retailer were paying a median premium of $21,642. According to Robert Parisi, cyber insurance exec from Marsh, “Pricing has stabilized.” He also added that “There is only so far things can go before people choke and say ‘I’ve had enough.’”
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According to broker Lockton Cos executive Ben Beeson, he has observed a “leveling off” of the price of this coverage among his clients after having watched the premiums continually being hiked as a response to the high profile data breaches that had been making headlines over the previous few years.
There is a reason those hacks were bringing on such large rate hikes among cyber insurance companies. The payouts for the attacks were exceptionally steep. Target’s breach was covered by $90 million and the hack experienced by the Home Depot saw an even higher insurance payout of $100 million. Beeson pointed out that “We haven’t had too many Targets or Home Depots recently.” As a result, the price of coverage has fallen.