Cyber attacks are becoming more common, leading to a rise in demand for insurance protection
Cyber attacks of businesses are beginning to increase in frequency, according to Lloyd’s of London’s Barbican Group. The underwriting group believes that the market for cyber insurance will increase dramatically over the coming years, noting that premiums for this coverage have skyrocketed since 2009. Businesses are beginning to be targeted by cyber attacks because some of them lack appropriate security measures, while others simply cannot keep up with the rapidly evolving nature of digital threats.
Cyber insurance premiums expected to surpass $2 billion by end of 2014
According to Barbican, cyber insurance premiums reached $850 million in 2012. In 2013, these premiums grew to $1.3 billion. The underwriting group expects that cyber insurance premiums will reach well beyond $2 billion by the end of this year. The increasing frequency of cyber attacks is leading to a rapidly growing demand for insurance protection. Notably, demand is rising fastest among retailers in the United States, many of whom have begun to participate in mobile commerce.
Relatively few companies have the coverage that they need
Despite the growing number of companies that are acquiring cyber protection, many companies are still exposed to attacks. In the United Kingdom alone, nine out of 10 small companies are falling victim to data breach fairly regularly. These attacks are having a major financial impact on these companies and it could take years for some to recover. This financial damage is being compounded by the damage being done to their reputation among consumers. When a company cannot protect itself from cyber attacks, consumers may lose trust in these companies. Cyber insurance may not be able to protect against this particular aspect of cyber attacks.
New technology may be part of the problem
New technology may be playing a role in the growing prevalence of cyber attacks. Businesses are rushing to make use of cutting edge technology that they may not be fully comfortable with using. This is common throughout the mobile commerce space, where retailers are trying to make use of new payments platforms to accommodate growing demand amongst consumers. Because many companies do not understand the technologies that are used in mobile commerce, they are falling prey to cyber attacks specifically focused on the mobile field.