Cyber insurance is now booming, with about 50 carriers in the industry. An increasing number of companies have cyber insurance to protect against cyber crime. However, businesses claim it’s not easy to get adequate coverage.
Losses from data breaches are difficult to quantify. The tangible losses are more easily insured, says a New York Times online report. When it comes to a data breach, there are often related losses such as reputational damage and loss of customer loyalty that are harder to quantify.
Add to this the fact that underwriters don’t yet have sufficient data to estimate the likeliness or cost of an attack; most breaches get missed or aren’t reported publicly.
While an insurance company can tell you the precise odds of a major city office building burning down, nobody knows when the next giant retailer will be hacked. Statistics on hacking risks aren’t constant due to the continuous evolution of cyber crimes.
According to New York Times estimates, companies seeking coverage can only hope for, at best, a $300 million policy, peanuts compared to the billions devoted to property protection. Though this still sounds generous, the cost of a major breach can easily exceed it. Target’s situation is on course for just that, says the New York Times online article. The 2011 Sony breach has already exceeded $2 billion in fallout.
The best policies cover costs associated with alerting customers, plus forensics, call center setups, consumer identity monitoring, legal fees and a crisis management firm. But that may only dent the disaster. Policies don’t address loss in profits due to customers jumping ship. A policy can’t prevent a marred brand reputation. “Although a solid cyber policy will cover notification, crisis management expenses, defense costs, damages and the costs associated with regulatory action, it would not cover other, potentially much larger losses, such as reputational injury and loss of brand and market share,” says Roberta Anderson, an insurance coverage and cybersecurity attorney with the law firm of K&L Gates, LLP. “Those losses are difficult to value and remain uninsurable in the market today.”
Expect the cyber insurance industry to continue swelling while cyber crime continues to remain several steps ahead of businesses and security systems.
Robert Siciliano is an Identity Theft Expert to AllClear ID. He is the author of 99 Things You Wish You Knew Before Your Identity Was Stolen See him knock’em dead in this identity theft prevention video. Disclosures.
ROBERT SICILIANO, CEO of IDTheftSecurity.com is fiercely committed to informing, educating, and empowering Americans so they can be protected from violence and crime in the physical and virtual worlds. His "tell it like it is" style is sought after by major media outlets, executives in the C-Suite of leading corporations, meeting planners, and community leaders to get the straight talk they need to stay safe in a world in which physical and virtual crime is commonplace. Siciliano is accessible, real, professional, and ready to weigh in and comment at a moment's notice on breaking news.
- Cyber Insurance vs. General Liability
One of the biggest data breaches of all time involved that of Sony Corp. The hackers stole confidential information from tens of millions of Sony PlayStation Network users. Despite this humongous breach, something surprising happened: New York Supreme Court Jeffrey Oing ruled that Mitsui Sumitomo Insurance Co. and Zurich American Insurance Co. owed NO defense
- What’s the Point of $1 Million in Insurance for Identity Theft?
Honesty is the best policy, right? I’ve spent my life being honest, and do you know what is the most important lesson I’ve learned is? The truth hurts. And when you (meaning me too) says it like it is, someone somewhere isn’t going to like it. So I’m being honest here: The identity theft protection
- Data Breaches hurt Businesses’ Brand
That very newsworthy data breach that’s still in the news struck 110 million customers, not the more commonly reported 40 million; that’s one-third of the U.S. population. There was also another, but less publicized, breach of huge proportions that occurred to a major retailer in mid-December of 2013. And some reports say another 6 or more
- Another Way to Investigate Insurance Fraud
Insurance fraud has been around since the dawn of the insurance policy, largely due to its reliance on the honor system. It’s fairly easy to file and process a fabricated claim—just a matter of filling out paperwork online, really. While there are certainly some checks and balances in the claim investigation process, there are often
- Courts side with Consumers in Data Breach
In general, courts don’t tend to side with consumers in data breach incidents. However, a federal court in Florida is the apple among the oranges. It approved a $3 million settlement for victims whose data was on a stolen laptop in December 2009, that contained personal health information. The laptops belonged to AvMed, a health insurer,