Despite the proliferation of cyberattacks, Cerulli Associates, Boston, found that many DC plans lack cyber insurance.
In a report that will be issued next month, the research firm found that 29% of 702 DC plan sponsors surveyed in the third and fourth quarters didn't have cyber insurance, while 9% said they planned to have it within the next 12 months. Sixty-one percent have the insurance.
Cyber insurance "may not be top of mind for sponsors," said Shawn O'Brien, Boston-based senior analyst for retirement at Cerulli Associates. "I imagine cost can be prohibitive, especially for some of these smaller organizations."
The survey said 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; another 12% said they would add it in the next 12 months.
For plans with assets between $25 million and $250 million, 25% said they didn't have insurance and 8% said they would add it within the next 12 months. For plans with more than $250 million in assets, the respective rates were 22% and 8%.
Those numbers belie what many DC plan sponsors have said about cyber insurance.
"In my experience, virtually every plan sponsor that we work with is aware of the need" for cyber insurance, said Ben Taylor, San Francisco-based senior vice president and defined contribution consultant at Callan LLC. "It is similarly as common to know that you need it (and) it is almost equally uncommon to know what to do about it."
Part of the challenge is determining coverage details because common terms such as "breach" can have different meanings to different insurers and law enforcement agencies, he said.
The February GAO report illustrated this dilemma. Twelve of 19 insurance and retirement plan experts interviewed by the GAO said sponsors "may not understand what their cyber policies actually cover." Sources of confusion included "lack of consistent terminology, policy types and pricing models across the cyber insurance industry," the report said.
Mr. Taylor said the retirement industry welcomes more clarity and transparency.
"Clients are very hungry for clear guidance from those who are engaged in actually creating new solutions for the industry," he said. "What has really been a challenge is providing adequate education and expertise to every plan sponsor so they can be an informed consumer."