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Most companies are largely unprepared for cyber threats, according to a major new survey conducted by Argo Group International Holdings.
Entitled ‘Under Attack and Unprepared: Argo Group Cyber Insurance Survey 2017’, the survey claims that a majority of respondents (57 percent) do not have any kind of cyber insurance, despite nearly two-thirds (63 percent) having experienced some form of cyber incident. More shockingly, less than half of the respondents were confident in their capacity to deal with cyber incidents.
“Every company is vulnerable to cyber incidents, but most lack cyber insurance,” said Simon White, senior vice president, group head of cyber. “This survey provides insights to improve awareness of cyber incidents and the risks associated with these incidents.”
In 2017 the US experienced one of the biggest data breaches in its history. Hackers gained access to an estimated 143 million personal records via a major consumer credit reporting agency. According to Argo this breach confirms that cyber criminals are becoming more sophisticated and targeting companies from all industries. As a result of the attack, the consumer credit reporting agency lost an estimated $4 billion in stock value, and yet-to-be-determined losses caused by customer abandonment.
Last holiday season, Yahoo! confirmed that hackers gained access to more than one billion customer accounts. The significance of this hack ultimately reduced the company’s sale price by $250 million.
With the personal data of hundreds of millions of Americans’ already compromised in 2017, companies can no longer afford to ignore the need to purchase satisfactory cyber security policies. The future of the nation’s security and economy depends on businesses’ ability to effectively manage and protect from cyber breaches.
“If we learned anything from last holiday season and throughout 2017, it’s that cyber vulnerabilities are a direct threat to American businesses of all sizes,” says White. “Business disruption is extremely costly, and cyber incidents have the potential to destroy an entire business in a single event. Cyber insurance is the best tool to prevent this kind of damage from happening.”
Although the Argo survey shows that only 27 percent of SMEs are “likely” or “very likely” to purchase cyber insurance, a majority of respondents (60 percent) don’t believe their current internal cybersecurity processes are adequate. SMEs indicated they did not purchase cyber insurance for a variety of reasons: they believe their in-house security is adequate (42 percent), they believe insurance is too expensive (35 percent), and/or there is a lack of interest in cyber insurance from their senior management or board of directors (32 percent).
“Companies continue to overestimate their ability to protect against potential attacks and underestimate the damage a cyber attack can cause,” says White. “It’s only a matter of time before the next major cyber attack, which is why it’s crucial for companies to take the time to reevaluate how they protect themselves.”
Companies with cyber insurance appear to value the product – and they use it. Thirty-six percent of respondents with cyber insurance policies have filed claims with their providers in the past 12 months. More than one in five companies with cyber insurance policies are seeking to expand the coverage of their policy.
SMEs that have cyber insurance policies are highly satisfied with their products. Eighty-nine percent say their cyber insurance is performing as expected, 86 percent report that their cyber insurance covered the security breaches they suffered, and 68 percent say they are satisfied with their cyber insurance coverage.
“Argo’s purpose is to help businesses stay in business,” says White. “Cyber insurance, along with our other specialty products, is one of the many ways we can do that.”
Argo Group International Holdings, Cyber insurance, Bermuda, Survey