A Ponemon survey out today shows about a third of business and public-sector organizations buy cyber insurance to help protect them financially against data breaches and other security exploits. But the survey of 638 U.S. organizations shows there's still a lot of skepticism about whether such insurance is worth the cost.
One finding in the report is that the CIO and IT security divisions have only a small influence on whether to buy cyber insurance, while the risk management, line of business leaders and chief financial officers seem to have the final word.
Background:Got cyber insurance?
The survey was sponsored by Experian Data Breach Resolution.
Forty-three percent of respondents said they don't have plans to purchase cyber insurance, mainly because they think the premiums are too expensive and there are "too many exclusions, restrictions and uninsurable risks."
Many believe that the property and casualty policies their businesses now have are "sufficient" and 26% admitted their organizations "are unable to get insurance underwritten because of our current risk profile."
But of the third of the survey's respondents that do have cyber insurance, 62% said they considered the premiums "fair given the nature of the risk." Only 29% said they think the premiums are too high.
Since purchasing the cyber insurance policy, 30% of the respondents said their company experienced a security exploit or data breach and had submitted a claim for losses. Many had also asked for assistance in the wake of a breach. Businesses that submitted claims related to cyber insurance expressed overall satisfaction with the insurer, with 95% rating the insurer's responsiveness as "excellent, very good or good."
According to the report, the chief information officer and the chief information security officer have "very little influence" in deciding whether to buy cyber security insurance.
"Risk managers are most often responsible for the decision-making process," the report says, along with corporate lawyers, CFOs and compliance officers.A If the decision is made to buy cyber insurance, the CISO is responsible for evaluating and selecting the insurance provider about 16% of the time.
The main types of incidents covered in cyber insurance policies are said to be "human error, mistakes and negligence, followed by external attacks by cyber-criminals, system or business process failures and malicious or criminal insiders." Only 11% of respondents indicated their policies cover attacks against business partners, vendors or other third-parties with access to information assets of the company.
The costs covered by cyber insurance are varied, with most respondents indicating they were covered for notification costs to data-breach victims, legal-defense costs, forensics and investigation costs, replacement of lost or damaged equipment and regulatory fines and penalties.
The survey shows companies rarely do a formal risk assessment by in-house staff to figure out how much insurance coverage should be purchased. Instead, they rely on the insurer to do that or take a very informal approach. Only 32% of the respondents said the IT security department had a very significant level of involvement; 35% cited "some involvement;" and 33% said there was absolutely "no involvement" for IT security staff.
The survey also showed that during the past 24 months, 56% of the respondents said their businesses had experienced a significant data breach or security-exploit incident and most wouldn't rule out something happening in the next 24 months. Not surprisingly, experiencing a data breach or cyberattack greatly increased the company's interest in buying cyber insurance.
Ellen Messmer is senior editor at Network World, an IDG publication and website, where she covers news and technology trends related to information security. Twitter: MessmerE. E-mail: email@example.com
Read more about wide area network in Network World's Wide Area Network section.
This story, "Decision to Buy Cyber Insurance Usually Leaves CIO, CISO Out of the Loop" was originally published by Network World.