Agents and brokers for property and casualty insurance are being advised to keep abreast of the very latest information and statistics regarding the ever-growing risk of cyber attacks and the different kinds of coverage solutions that can allow their clients to decrease financial exposure.
As hacking into private information of all types – financial, personal, and medical, for example – becomes increasingly common, insurance professionals must be able to keep up so that they can offer their clients the right forms of coverage, particularly in terms of miscellaneous professional liability.
After all, it does seem that no one is immune to this kind of information theft. Very recently AT&T released an apology to 114,000 customers who had purchased iPads – including some well-known celebrities – after email addresses were stolen and then posted on a gossip website online. Also recently, Citigroup contacted 360,000 of their clients to advise them that their account information had been compromised.
This news is far from rare. Those are only two examples of a long line of data theft that affected companies of all sizes, including very large multinational corporations, and even government agencies. Breaches in privacy, both criminal and accidental, are on the rise, and so is the expense related to them.
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This has also meant that one of the most rapidly increasing forms of litigation is the violation of regulations and laws regarding privacy. Lawsuits abound, with accusations of breach of warranty, negligence of security in data systems, and failure to adequately advise customers following a security breach or accidental information loss.
Clearly, the financial risk associated with this is also on the rise. Potential costs can include expenses connected to the legal and regulatory costs for advising individuals who were affected by the issue, liability to employees or customers whose data has been exposed, interruption of business, time required to restore computer systems, reputation damage and even extortion demands.
Most agents that are familiar with cyber liability insurance are now recommending a minimum of an organization-wide network security and privacy liability endorsement, though this is often paired with other products such as regulatory defense coverage, crisis management coverage, data restoration coverage, business interruption coverage, and/or computer system extortion coverage.