Getting hacked is almost as certain as death and taxes. If a company hasn't been hacked yet, it probably will be. If a company has been hacked, they can expect to be hacked again: In IBM's 2022 "Cost of a Data Breach Report," 83% of victims reported they were hacked more than once. Data breaches are not limited to Fortune 500 companies. Due to the proliferation of hackers, the low cost of hacking kits, and the universal addiction to data, virtually all enterprises are at risk. Even small businesses, like one-person retail operations, have suffered from and will remain subject to ransomware and data breaches.

In this article we will discuss the increasing risks of data breaches and the option for cyber insurance. We will describe cyber insurance, highlight recent cyber insurance cases involving "hostile or warlike action" policy exclusions, and discuss the future of cyber insurance as the catalyst for higher data security standards.

Losses From Data Breaches

The financial costs of data breaches are staggering. When combined with potential lost customers and reputation damage, the total cost mandates that prudent companies take all reasonable precautions. According to IBM, the global average cost of a data breach is $4.35 million, and $9.4 million in the United States. The pandemic only made things worse. When employees work from home, they often access company data at non-secure locations on unprotected devices. On average, data breach costs were $1 million more expensive when remote work was a factor. With 44% of companies allowing remote work, the risks only increase.