Only 16% of IP assets exposed to cybercrime threat are insured: Aon
While four out of five organisations rank cyber liability and IP among the most serious business risks, only 16% of the $1 billion in potential losses have insurance coverage.
This is the finding of the “ 2019 Intangible Assets Financial Statement Impact Comparison Report”, released yesterday, April 30, by professional services company Aon.
By comparison, 60% of traditional tangible assets, which include property, plant and equipment (PP&E), have insurance coverage.
This coverage differential contrasted with the average potential loss to certain intangible assets of $1.08 billion compared with $795 million in losses to PP&E, according to Aon.
While respondents valued intangible assets slightly higher than PP&E at $1.15 billion and $1.03 billion, respectively, the report found that the average potential loss if intangible assets are stolen or destroyed was 36% more than if PP&E is damaged or destroyed.
Lewis Lee, global head and CEO of Aon's IP solutions, said: “Understanding how to properly value, exploit and insure intangible assets is exponentially heightened in the digital era. Intangible assets are a board of director level issue.”
Nearly one-third (28%) of respondents said their company had experienced a material IP event in the past two years.
Most incidents involved infringements or challenges to IP (69%) or the company’s alleged infringement of third-party IP (31%), with trade secrets (42%) being the most common type of IP, followed by copyrights (26%) and patents (24%).
Despite the prevalence of IP incidents, only 24% of companies have a trade secret theft insurance policy and 30% have an IP liability policy.
But there does appear to be significant interest in purchasing these policies, said Aon.
Lee added: “While few companies have trade secret theft insurance policies or patent liability policies, organisations, by better understanding intangible versus tangible asset coverage, are better equipped to make informed decisions regarding strategy, valuation and risk transfer with respect to IP and other intangible assets.”
The 2019 study also found an increase of 33% in the protection of potential loss of information assets, compared with an increase of 9% for PP&E between 2015 and 2019.
According to Aon, this indicates that organisations have begun to recognise the value of intangible assets as well as the significant risks surrounding their loss.
The report surveyed more than 2,300 organisations representing different industries and geographies across the globe.
Earlier this year, WIPR investigated the relationship between IP and insurance. What seems to unite these two industries is that, in some way, IP and insurance are both targeted at removing the concerns of companies and potential partners by providing a shield (and in some cases a sword).
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