In a study by cybersecurity software provider CYE, 80% of insured companies that suffered a data breach reported they did not have adequate coverage to offset the losses incurred. In fact, the average coverage gap was 350%, meaning that more than 75% of the costs from an incident were uninsured, amounting to an average uncovered loss of $27.5 million and an estimated 2.9% of company revenue. In some cases, the maximum coverage gap reached as high as 3,000%.
Relatively “low-tech” sectors like accommodation and food services, construction, and transportation and warehousing were more adequately covered, while the finance and insurance, information, and manufacturing sectors saw the largest coverage gaps, often exceeding 100%. This disparity is likely due to heavier reliance on digital assets and systems in the latter sectors, which increase their vulnerability to attack. In addition, since data breaches in these high-risk industries can have such an immense impact, adequate insurance coverage can be difficult to obtain.