By Guy Weismantel, Vice President of Marketing at Vertafore
With the rise of the Internet's popularity over the last two decades, the worlds of business, healthcare, banks and even governments have fallen prey to poor cyber hygiene, and with it have left consumers vulnerable. In the last eighteen months cyber attacks have broken down the doors of privacy at dozens of health care providers, financial institutions and retailers. Whether you've shopped online, visited your doctor or purchase lumber for a backyard project, your private and personal data has likely been stolen and sold in black markets.
The Real Cost of Not Having Cyber Security Insurance
Of the five large healthcare cyber hacks of 2015, health insurer Anthem took the greatest loss. Having lost over 78 million private records, including social security numbers, birth dates and other sensitive information, Anthem is now on the hook for untold sums of capital loss; legal fees, legal settlements and identity theft-repair and credit monitoring for consumers will likely cost upwards of $1 billion.
Research from the Ponemon Institute and IBM pegs the cost of cyber hacks to be $154 per record breached. When JP Morgan Chase lost 83 million records in 2014, their total cost, which is still rising from ongoing legal battles, is expected to reach $12 billion.
New Entrants Legitimize Cyber Security Insurance Market
With this increased risk of cyber attacks, more businesses have seen the need for cyber security insurance and savvy insurance firms have stepped in to fill the need. Warren Buffet has been watching the cyber security insurance industry closely and in October of 2015 he invested heavily in the space. Buffet's insurance arm, Berkshire Hathaway Specialty Insurance (BHSI) created two new types of insurance to help businesses of all sizes decrease risk from cyber attacks. The two insurance types provide coverage for cyber liability and breach response. BHSI's entrance into this insurance space is not a menial one either - they've invested heavily in the space and created robust products that are highly customizable. Their offerings include creative customizations options such as errors and omissions liability coverage that can be unique to each buyer.
Other insurers are urgently moving in to meet the demand that has been created. According to a recent study by the consulting firm PwC, the insurance market is set to triple in the next five years - increasing to about $7.5 billion. As insurance providers open up new offerings to leverage this demand and capture a piece of that $7.5 billion pie they are also turning to new technology and tools to help them scale into the new market. As they do so, they continue to see how important embracing technology is to remain competitive and better manage risks. Not only is embracing new technology keeping these insurance agencies and providers relevant in the changing markets, it also keeping their sensitive data safe as new agency software providers have been working extensively at increasing the security of their software.
Learn more about the role data will play in the future of insurance in Vertafore's new Digital Disruption ebook.
Vertafore delivers cloud-based insurance software and services that transform the business of insurance. With the largest customer-base in the industry, more than 20,000 agencies and carriers leverage Vertafore’s insurance solutions that are built on today’s most advanced cloud, mobile, and information technology platforms. Learn more and contact Vertafore.