The percentage of companies holding data breach or cyber insurance policies has grown from 10% a year ago to 26% this year, according to the Ponemon study. The policies are offered by a range of insurers, such as Chubb Group of Insurance Cos. and The Travelers Cos.
Among retailers, that percentage is likely significantly higher, says Greg Schaefer, president of the insurance agency Schaefer Enterprises Inc., noting that about half the proposals he submits to retailers are accepted. The reason, he says, is simple: “Retailers are starting to see how costly these breaches are.”
The average cost of a breach last year was $5.9 million, up more than 9% from $5.4 million a year earlier, according to a different Ponemon cross-industry study. That may help explain why most policies retailers take out with Schaefer range from $1 million to $5 million in coverage. The costs of those policies typically range from around $10,000 to upward of $80,000 annually, based on a variety of factors, including the nature of the merchant’s security procedures—insurers typically audit the retailers before providing coverage—and their deductibles.
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