Cyber Exposure on the Move for Manufacturers
Cyber exposure has recently been an issue for consumer-facing businesses like retailers, financial service providers and hospitals. In the past, this risk has been indemnified by cyber insurance as these businesses pushed for more digital integration from within. But, as different types of businesses become increasingly digital, the need for cyber protection has amplified, as well. Manufacturing is an industry that is recognizing this risk.
In 2016, according to Advisen Ltd., manufacturers paid $36.9 million in premiums for cyber policies, based on a sample of 9,000 mostly US companies. This trend is up 89% over the previous year.
There is an increased exposure from a cyber perspective in the industry overall, with more cloud data, sophistication of hackers and interactions on social media. Factories are computerizing, automating, and integrating all parts of the company the attempting to keep those networks secure. It is becoming more difficult to imagine a part of a company that would not be touched by cyber threat.
Currently, many P & C, or Property & Casualty, policies require there by physical damage before they pay. What this means is that, in the event of a cyberattack that results in the shutdown of a factory, the manufacturer may not be covered. Selecting cyber policy forces manufacturers to prioritize what areas to protect, and the bigger the company, the more the policy can be tailored for different scenarios.
The market is young for manufacturers purchasing cyber insurance, and the premiums vary greatly due to this factor. Policies can cost up to $15,000, depending on the amount of coverage and the size of revenue, although the manufacturer would be very large to warrant a premium of that size.
Selling cyber insurance is not the problem; It is creating the awareness to the exposure for the manufacturer. In the event of a cyberattack, no one wants to explain in a board meeting why cyber insurance wasn’t purchased, given how cheap it is.