In a recent report, CYE, a leading cybersecurity optimization platform provider, revealed alarming discrepancies in cyber breach insurance coverage. The study, “Inadequacies in Breach Insurance Coverage: A Data-Driven Gap Analysis,” highlights a massive 350% gap between organizations’ insurance coverage and the actual costs incurred from cyber incidents. This gap results in an average of $27.3 million in uncovered losses per breach.
According to the study, 80% of companies with cyber insurance found themselves underinsured when faced with data breaches. In extreme cases, the insurance shortfall soared as high as 3,000%. Sectors traditionally viewed as “low tech,” such as accommodation and food services, construction, transportation, and warehousing, showed relatively better insurance adequacy. In contrast, high-tech industries like finance, information, and manufacturing exhibited coverage gaps exceeding 100%.
“Cost of a breach”
Nimrod Partush, CYE’s Vice President of Data Science, emphasized the widespread lack of understanding among organizations regarding cyber breaches. He stated, “Many organizations are aware of the risks but severely underestimate the potential costs of a breach. Our findings reveal a significant disparity between the perceived and real values at risk, underscoring the need for a more robust approach to cyber risk management.”
The report strongly advocates for more precise cyber risk quantification (CRQ) measures. By accurately assessing cyber risks, organizations can more realistically gauge the potential cost of a data breach and address strategies and budgets. Effective CRQ enables companies to achieve higher returns on investment in cybersecurity. Ultimately helping them to sidestep breaches and their costly repercussions.
CYE’s findings underscore the critical need for organizations to reevaluate their cyber risk strategies and insurance coverages in an age where digital threats are increasingly severe and consequential.
Full Report: Inadequacies in Breach Insurance Coverage: A Data-Driven Gap Analysis.
Other News: C-suite Cybersecurity Gap Leaves Businesses Exposed(Opens in a new browser tab).
I have been preaching this for more than 10 years. It’s horrific that P&C Brokers are not educated enough in Cyber to correctly assess and benchmark the Cyber Insurance limits for a client. I am passionate about fixing this. With our new CARE Program launch, we will address this. We are not writing insurance, we are fixing an inherent problem with the insurance process. Many companies will suffer due to CFO’s committing the error of mistaking being in compliance vs. being properly insured. There is a huge difference. Millions$.