2012 will begin a massive expansion in cyber attack insurance

Cyber Liability InsuranceThis year, the world watched as many corporations – even those that are reputed to have the strongest security systems in place – experienced massive data breaches that were so extensive that their final damage total has yet to be calculated.

For example, Sony experienced a tremendous breach to the personal account data stored within its network, and has yet to determine precisely how much the cyber attack has cost the company. The most recently published total was that 100 million customer accounts had been compromised, and that they predict that when all is said and done, it will have cost the organization about $200 million. However, as there are currently 58 class action suits in progress, that figure may rise significantly.

What made that particular situation even worse for the company was that the losses are not covered by insurance.

Sony’s insurance company, Zurich American, said in a lawsuit that while it does have policies with them, cyber insurance is not part of its coverage. Therefore, it is only tangible losses such as damage to property that are protected, and not attacks in the digital environment.

According to the principal of the cybersecurity team at Good Harbor Consulting, Jacob Olcott, that’s precisely what cyber insurance is. He added that “Everybody needs it, and most companies don’t realize they don’t have it until it’s too late.”

Regardless of the cyber attacks that were witnessed worldwide to Google, RSA, Epsilon, and – of course – Sony, the results of a survey performed by the research group, Advisen, only one out of every three companies have purchased protection against cyber incidents.

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