Think of web security as household insurance or your home security systems. You pay every month to make sure that if any of your valuable items are lost, stolen or broken, or if there are attempts to gain access to your personal items, you are protected or covered. Web security protects your identity, safeguards your information and protects your business or any business that you receive services or goods from.
The Cost and Risk of Web Security and Web Protection
Hacking is on the rise and as a result the cost of web security and insurance is at a paramount high because of a huge number of cyber-attacks on US companies over the past two years. This has caused cyber insurers to hike their premiums for companies that are deemed high risk, and insurers have limited the damage cover to two years and a maximum of $100 million cover claim, according to a Reuters report. With the added risk and increased premiums, it makes it harder for companies to turn a profit and to ensure they have the financial backing if any type of hack should occur, this in turn means that the consumer or end user is paying more for services rendered and for products purchased.
A hack is a costly event, the company incurs costs for forensic investigations, credit monitoring, legal fees and possible settlements, and even with insurance and limited damage cover the company itself could be subject to paying huge amounts if hit by a cyber-attack. In many cases it reaches hundreds of millions of dollars.
Attacks in the Media
US retailer Target was attacked in 2013, the total cost of the hack was $264 million. Target has claimed to expect a recoup of only around $90M from insurance payouts according to Reuters. Home Depot was also hacked and it cost the retail chain $234 million in expenses, and insurance will only cover around $100 million, said Reuters.
Sony, Home Depot, and Target are just a few of the high profile hacks that have compelled insurance companies to deem certain companies “high risk”, especially in the health and retail industries, as these companies have a huge amount of sensitive data such as personal information and payment profile information.
Three insurance agencies as of late told Reuters that they turned away customers looking for web protection or have only provided limited coverage from $75 million to $100 million subsequent to inspecting organizations’ computer security mechanisms.
Cyber insurance monthly premium rates are very similar to those of home security system companies as the premiums are quoted according to security measures already in place.
Which industry is affected most?
The industry affected most by the insurance hacks are the Health Insurers, the premiums going up and sometimes tripling in price according to Bob Wice, a focus group leader for insurance company Beazley.
The beginning of 2015 saw huge security breaches that affected millions of clients of two US health insurance companies, Premera Blue Cross and Anthem. According to Reuters, after Anthems was hacked, they renewed their insurance and only managed to obtain a $100 million protection and only on the condition that $25 million would be paid out upfront in the event of a claim.