DC Industry Faces Similar Cyber ​​Insurance Problems To Others

Despite the proliferation of cyber attacks, Cerulli Associates in Boston discovered that many DC plans do not have cyber insurance.

In a report to be released next month, the research firm found that 29% of the 702 defined contribution plan sponsors surveyed in the third and fourth quarters did not have cyberinsurance, while 9% said they did not have cyber insurance. ‘they planned to have it over the next 12 months. . Sixty-one percent have insurance.

Cyber ​​insurance “may not be a priority for sponsors,” said Shawn O’Brien, Boston-based senior analyst for retirement at Cerulli Associates. “I imagine the cost can be prohibitive, especially for some of these small organizations.”

The survey found that the smallest plans – those with less than $ 25 million in assets – were the least likely to have cyber insurance. Thirty-seven percent said they didn’t have it; 12% said they would add it in the next 12 months.

For plans with assets between $ 25 million and $ 250 million, 25% said they had no insurance and 8% said they would add it in the next 12 months. For plans with assets over $ 250 million, the respective rates were 22% and 8%.

These numbers contradict what many DC plan sponsors have said about cyber insurance.

“In my experience, virtually every plan sponsor we work with is aware of the need” for cyberinsurance, said Ben Taylor, San Francisco-based senior vice president and defined contribution consultant at Callan LLC. “It’s just as common to know that you need it (and) it’s almost just as rare to know what to do about it.”

Part of the challenge is figuring out the details of coverage, as common terms like “violation” can have different meanings for different insurers and law enforcement agencies, he said.

The February GAO report illustrates this dilemma. Twelve of 19 insurance and pension experts surveyed by GAO said sponsors “may not understand what their cyber policies actually cover.” Sources of confusion included “the lack of consistent terminology, policy types and pricing models in the cyber insurance industry,” according to the report.

Mr. Taylor said the retirement industry wants more clarity and transparency.

“Customers are very hungry for clear advice from those who are genuinely engaged in creating new solutions for the industry,” he said. “What has really been a challenge is providing the right training and expertise to each plan sponsor so that they can be an informed consumer. “

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