Aon plc has published a new report in collaboration with independent researcher Ponemon Institute, which found that businesses continue to undervalue and under-insure intangible assets relative to tangible assets.
According to the study, since 2009 the implied market value of intangible assets at S&P 500 companies increased 255%, while the book value of tangible assets only increased 97% over the same period, continuing the trend identified in past study results.
It was also reported that most businesses (86%) recognise that cyber liability and intellectual property (IP) risks rank among the top 10 business risks, yet 70% still do not purchase cyber insurance coverage.
Despite the relatively lower value of tangible assets, property, plant and equipment (PP&E) assets have 58% insurance coverage versus only 17% for certain intangible assets.
This coverage differential, contrasted with the average potential loss to certain intangible assets of $1.2 billion compared with the average potential loss of $839 million to PP&E, is substantial.
Compounding this discrepancy is the finding that business disruption – due to the rise in ransomware attacks – has a greater impact on information assets ($321 million) than on PP&E ($143 million).
Other findings from the report are that insurance coverage is higher for PP&E than for intangible assets. On average, approximately 58 percent of PP&E assets are covered by insurance and approximately 30 percent of PP&E assets are self-insured.
Aon stated that while the likelihood of a loss is higher for information assets than for PP&E, only an average of 17% of information assets are covered by insurance, while self-insurance is higher for information assets at 60%.
In the past two years, 35% of respondents say their company experienced a material IP event. The majority of events involved either trade secret rights (41% of those who experienced an event), copyright rights (26%) and patent rights (25%).
Kevin Kalinich, global collaboration leader, intangible assets at Aon said: “The COVID-19 pandemic accelerated the rise of digital assets, providing new cyber and intellectual property opportunities for organisations.
“The economies of scale derived from intangible assets often dwarf what can be achieved through tangible assets.”
Christine Williams, global specialty products leader, Commercial Risk Solutions at Aon said: “As we work with our clients to navigate new challenges and shape better decisions, we are committed to helping create risk transfer solutions.
“We are aiming to create not only more holistic cyber solutions, but also a market with new sources of capital to help value and protect intangible assets and intellectual property.”
