The 4 Dollar Benchmark
Although Cyber Insurance is more well known across the agency landscape, still most agencies are not quoting it on every commercial risk. Despite the fact that the highest probability of loss for almost any business today is a Cyber event, commercial insured’s do not understand the real scope of their risk, and the effect the consequences of such an event can have.
We are often asked by our agents what the average Cyber claim/loss amount is. This is a question that cannot really be answered due to the third party/first party nature of the coverage. Many different parts of a Cyber policy can be triggered by a single event, however, there is no real formula for when this is more likely to happen.
Instead, the better approach for the agent is to measure your customer’s MINIMAL exposure using simple math: Total # of records x $4. The sum of this formula is the minimum amount of out of pocket cost a commercial entity will spend in order to respond to the breach. Again, this is only the first party notification costs and nothing else, which all entities will pay should they experience a privacy breach.
Next week we will focus on the biggest hidden danger in purchasing Cyber Insurance of any kind today: the extreme difference in the policy language and knowing what is really covered from carrier to carrier.
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