Smaller and medium sized businesses are discovering that data breach liability protection is vital.
According to recent data that has been released by the Center for Strategic and International Studies, last year, alone, there were more than 3,000 businesses in the United States that experienced a data breach, and the increase in cyber insurance policies shows that companies have not all failed to learn the lesson from this threat.
Among those businesses, many of them are small and medium sized firms with minimal protection.
The rapid rise in cyber attacks has brought about a boom to the cyber insurance industry as companies seek to protect themselves against the various risks and costs that are associated with data breaches. Across the United States, there are currently approximately 50 insurance companies that offer this type of policy to protect businesses against data breaches. Among the most notable is one of the very newest entries into this sector, Ridge Insurance Solutions, which was founded by former secretary of the Department of Homeland Security, Tom Ridge.
As businesses start to see the importance of cyber insurance policies, more insurers are getting into this market.
Across the U.S., it has been predicted by Betterly Risk Consultants that companies will be spending an estimated $2 billion on insurance premiums for policies that are designed to help to mitigate the risk of financial damage due to data breaches. This represents a 67 percent increase over the amount that was spent on those premiums in 2013, which was $1.2 billion. Comparatively, back in 2010, that figure had been only $600,000.
What is interesting is that it isn’t just the larger multinational organizations that are getting on board with this type of liability insurance. Instead, a growing number of small and medium sized businesses are taking out these policies. This has also become the case among vendors and contractors that serve large organizations such as massive corporations, hospitals, and even various government agencies. Most commonly, the smaller sized businesses that have found themselves showing interest in this type of cyber insurance coverage are among retailers, financial institutions, and technology companies.