Most companies purchase general liability insurance to protect themselves from potential lawsuits or claims resulting from accidents, injuries or negligence. They purchase professional liability insurance to protect themselves against the cost of errors, malpractice or negligence in services provided to their customers. Likewise, many companies are required by states to buy workers’ compensation insurance to ensure they can cover an injured employee’s medical expenses and loss of income.
So, why don’t more companies purchase cyber insurance to protect themselves against first- and third-party claims arising from cyber incidents?
Surprisingly, almost six in 10 small and medium-size enterprises (SMEs) don’t have any type of cyber insurance, according to “Under Attack and Unprepared: Argo Group Cyber Insurance Survey 2017,” a survey of 200 organizations in the U.S. and U.K. Also, of the 57 percent of SMEs that lack cyber insurance, only 27 percent say they are inclined to purchase a policy.
In today’s hyperconnected digital world, in which a lost or stolen laptop, a weak password, or a cleverly crafted phishing email can result in a massive data breach, does a lack of cyber insurance constitute good business sense?
We don’t think so. Nor do the respondents to the Ponemon Institute’s survey on cyber insurance – 76 percent of the respondents say cybersecurity risks are equal to or greater than other insurable business risks such as natural disasters, business interruptions and fires.
Here are six reasons why cyber insurance is most likely a sound business investment for your company: