About One-Third of Connected Tech Owners Experienced Identity Theft, Yet Only 15 Percent Have Cyber Insurance, Finds Study by J.D. Power and Insurance Information Institute

NEW YORK, Oct. 2 -- The Insurance Information Institute issued the following news release:

More than four out of five American consumers who own connected devices either lack insurance to protect them from cyberthreats or don't know if they are covered, according to the Insurance Information Institute and J.D. Power 2018 Consumer Cyber Insurance and Security Spotlight SurveySM, released today. Only 15 percent of connected device owners reported that their homeowners or renters policy covers them for personal cyberrisks.

The study shows evidence that the number of digital identity theft victims has been steadily growing. Nearly a third of people who use connected technology said they have been the victim of identity theft, up more than six percentage points from a 2014 poll of cellphone and land line users conducted by the I.I.I. that found 25 percent of respondents were affected. And despite the increasing reports of cyber breaches compromising millions of Americans' identities, the survey found three-quarters of connected technology users are not willing to pay for cyberrisk coverage.

While respondents to the study were resistant to insurance coverage to mitigate online security risks, 32 percent said they changed the way they used social media or connected technology after learning about incidents like the Facebook/Cambridge Analytica data breach and the Russian malware found in Wi-Fi routers.

Consumers participating in the Insurance Information Institute and J.D. Power 2018 Consumer Cyber Insurance and Security Spotlight SurveySM were queried on their knowledge of their personal cyberrisk coverage and their experience with identity theft. They were also asked what connected devices they have in their homes and vehicles, and their privacy concerns associated with the devices. The survey, conducted in July 2018, was the first spotlight poll released jointly by J.D. Power in partnership with the Insurance Information Institute. The online survey reached 508 owners of home and vehicle connected technology.

According to the Insurance Information Institute's analysis of the findings:

* Many Americans (63 percent) have at least one connected device in their home. Ownership of these devices is highest among 25-to-34-year-olds and lowest among people over the age of 65.

* Among those who have connected devices in their homes, the most popular are voice command assistants such as Amazon's Alexa or Google Assistant. Close to half (45 percent) who indicated that they have some form of connected technology in their homes own them. Almost a third own connected thermostats and wearables, such as Fitbits (29 percent and 27 percent, respectively), and one-quarter of these consumers have connected security cameras, door locks, doorbells and connected appliances.

* Almost a quarter of connected technology users said convenience is the main reason they chose these devices for their homes or cars (24 percent), while about one-fifth cited security and safety (19 percent). Fewer users cited a desire to have new technology as the main reason to choose connected technology (16 percent).

* Six out of 10 people who own connected technology said they do not have privacy or cybersecurity concerns related to their connected devices (62 percent). Yet almost half said they have taken steps to protect their privacy or security (46 percent), pointing to a substantial number of people who may look to cyber coverage to help in mitigating their cyber exposures.

"America's interest in connected technology shows no signs of abating," said David Pieffer, Property & Casualty Insurance Practice Lead, J.D. Power. "This study found that less than 18 percent those surveyed have no connected technology in their homes, underscoring the need for cyberrisk protection as more consumers choose to expose their personal information on these platforms."

As more connected technology becomes available, the I.I.I./J.D. Power poll shows that half of users are likely to buy another device for their home in the next year (49 percent said either they probably will or they definitely will) and 13 percent are likely to purchase a vehicle with a connected feature.

"As more consumers adopt home and vehicle devices that collect and store personal data and use online shopping and sharing networks, personal cyberrisk insurance is becoming an increasingly important component of homeowners and renters policies," said Sean Kevelighan, Chief Executive Officer of the Insurance Information Institute. "This survey shows that cyberrisk is already on consumer radar, but they aren't sure how and when to protect themselves. As digital identity theft and other concerns continue to rise, Insurance professionals have an important role in educating consumers about cyberrisk and the relatively inexpensive coverage that is available to protect them."

Insurance policies can differ by company, sometimes substantially. Yet the typical homeowners or renters policy only covers stolen identity risks via an endorsement that must be added at the policyholder's request. Known as identity restoration coverage, the endorsement helps policyholders after their personally identifiable information is stolen. Expenses such as attorney fees and lost wages may be covered, and a fraud specialist may be available to manage the restoration process.

As an alternative, some insurers offer stand-alone policies that cover identity restoration, along with professional assistance for responding to personal ransomware attacks and malware removal, as well as reprogramming computers and other devices such as Wi-Fi routers.