Cyber risk is a growing issue in the United States. In fact, a recent report from Allianz Global Corporate & Specialty shows that cyber risk is costing the global economy $445 billion each year with $108 billion coming from the United States. The same report predicts cyber insurance premiums will rise $2 billion globally each year and by more than $20 billion over the next 10 years.
Why the Increase in Cyber Risk Costs?
Cyber risk is a threat to all U.S. and global businesses. There are companies that are constantly exposed to new threats and the liabilities associated with those threats. For companies, there are first and third party damages that must be assessed on top of business productivity losses and regulatory consequences.
This has only become a problem over the past 15 years. The world’s top 10 economies account for more than 50 percent of the cybercrime costs which includes areas such as the United States, China, Germany and Japan.
Despite the growth in costs and risks, cybercrime is still an underestimated risk by business owners. As the problem gains more attention, however, insurance premiums are expected to increase and carriers will adopt new ways to counter those risks. The elements of what constitutes a “risk” will certainly change over the next decade. Today it is all about data breaches and privacy issues, but over the next 10 years, that will shift to circumstances involving:
- Intellectual property theft
- Cyber extortion
- Business interruptions
Recommendations for Business Owners—Insurance Coverage to Guard against Cyber Crime
As a business owner, you need to plan today to prepare for the increased cyber risks of the future. Some key recommendations that have been made by insurance industry experts include:
- Look for key assets that are vulnerable and address areas such as employee vulnerability or an over-reliance on third parties.
- You should start working to create a cyber security protocol within your establishment.
- You should always be on the lookout for “hidden risks” including how structural changes within your company can impact cyber security.
- Consider carefully and decide which risks you can control, which to avoid and which ones should be transferred to third parties.
- Cyber risk coverage for your business should evolve and become more complex with broader coverage as changes occur in the world of Internet technologies. Your policy should also start to address business interruption costs and help close the gaps.
Consult with The Nowell Agency today regarding your current business coverage and any gaps or exclusions related to cyber risks. Find a location near you today or request a quote online for your coverage.