While many small business owners likely think of a data breach incident as one of those things that could “never happen” to them, the fact of the matter is that this is a very real concern companies of all sizes should be working hard to address. However, while most owners pay lip service to the importance of doing so, very few actually follow through on this issue when it comes to protecting themselves and obtaining tech insurance.
Less than one in three companies today say they currently have tech insurance, but that number seems to be slowly growing, according to new data from the Ponemon Institute and Experian Data Breach Resolution. Another 39 percent of those polled said that they plan on buying this type of coverage in the relatively near future. Further, of those who already incorporate this type of coverage into their plans for protecting themselves against data breaches, half say it’s become a vital part of those safeguards.
“We are reaching a tipping point where the majority of companies we surveyed now rank cyber security risks as high as other major insurable business risks,” said Michael Bruemmer, vice president at Experian Data Breach Resolution. “We anticipate that demand for cyber security insurance is likely to increase in response to evolving breach response policies.”
The fact of the matter is that this issue is not going to go away for small businesses, which may be targeted by hackers because they tend to have far less in the way of initial security safeguards, making them easier to crack, and their attacks more difficult to detect for some time following the incidents, the report said. In fact, the average company now thinks that any data breach would cost them as much as $163 million to remediate – far more than the average small business could ever hope to afford – but only 9 percent of those polled said that they thought any such incident would actually cost them that maximum amount. Of the 56 percent of companies polled that said they’d already suffered such a breach within the previous two years the average cost they paid came to some $9.4 million.
How serious is this issue becoming?
More than three out of every four of the small business professionals polled generally said that they consider data breaches to be threats to their companies on par with natural disasters, an interruption of business, a fire, or the like, the report said. However, some companies said that they were somewhat concerned with the price of such tech insurance coverage, but of those who already had it, more than three in five said that they felt the cost was reasonable given how much of a financial risk they’re running without having such protection in place. Further, 30 percent of those who had insurance have submitted claims for such incidents, and of that number, 95 percent said that they were happy with the responses from their insurers.
In all, 62 percent of those polled said that they thought just taking the time to review whether they faced any problems that could lead to a data breach made them feel more prepared to protect themselves from such an incident in the first place, the report said. Moreover, the protections that tech insurance typically provide include those for notification costs, legal defenses, and those for forensic and investigative fees they incur.
Of course, finding tech insurance coverage may not be difficult, but seeking out the most affordable protection can be vital to any company’s small business insurance needs going forward.