The majority of business decision makers are insured against traditional cyber risks, such as breaches of personal information, but most were vulnerable to emerging risks, such as malware and ransomware, revealing a potential insurance coverage gap, according to the Hanover Insurance Group.
The report surveyed business decision makers about cyber vulnerabilities and risk mitigation efforts.
Insurance purchasing decisions influenced by media coverage
Most businesses surveyed indicated they had purchased cyber insurance, and more than 70% reported purchasing a policy on the recommendation of an independent insurance agent.
Purchasing decisions also were heavily influenced by media coverage and prior attack experience. Nearly 90% of study respondents reported experiencing a cyberattack during the past year, and recognized a cyberattack could have a disastrous impact on their businesses.
Other key findings: The insurance coverage gap
- The top cybersecurity fear for businesses was breach of personally identifiable information, however, malware-related attacks were the most commonly experienced attack. One in two businesses experienced a malware-related attack in the last year while fewer than one in five businesses experienced a breach of personal information
- 60% of businesses reported they would be unprofitable in less than two days if they lost access to critical systems or data. And, 92% reported they would experience a negative financial impact
- Over 40% of businesses had no cyber insurance or limits of $1 million or less, which may not adequately cover the cost of the average cyberattack
- Only 11% of businesses were concerned about cyberattacks threatening their supply chains, yet, 88% reported being dependent on third parties
The role of independent insurance agents
The study also affirmed the important role independent insurance agents can play as experienced advisers, offering risk management counsel and services to help small to mid-sized business owners protect their operations and maximize the benefits of their cyber insurance programs.
“Having the appropriate cyber protection will only become more important as new technologies emerge, businesses become more connected and cyber criminals develop more sophisticated methods,” said Bryan J. Salvatore, president of specialty insurance at The Hanover.
“As businesses grow in complexity, the advice of an independent agent becomes increasingly important in helping business owners understand the many risks they may face and mitigate those evolving threats.”