February 12, 2010

On Wednesday, an article on NationalJournal.com (link HERE) discussed a term that many of us had not heard before - "cyber-insurance." The concept seems to make sense - when you are at a potential risk of loss or damage to your property, and insurance is available to cover that loss or damage, insurance coverage at least worth considering. As noted within the article, "[t]o prepare American companies for the costly fallout of hacks, as recently experienced by Google's operations in China, a market for cyber-insurance has been taking root and is extending coverage to keep companies and customers safe in cyberspace." Although an economist in 2002 predicted the cyber-insurance market to reach $2.5B by 2005 (which appears to only be closer to $0.5B as referenced in the article), more and more companies, starting with a number of large financial institutions, have been utilizing cyber-insurance. Rob Knake, an international affairs fellow at the Council on Foreign Relations, is quoted in the article as saying "[t]he real cyber-weapons aren’t worms or viruses - they’re the people," and that "[y]ou’re not going to be able to defend against people who work against you while you sleep."

As referenced within the NationalJournal.com article, "Basic cyber-insurance covers hazards such as unauthorized Web site access, online libel, data privacy loss and repairs to company databases after system failures. Broader plans covering costs to notify customers of IT failures and loss of income from site failure are starting to be more widely offered. If intellectual property were insured and that data was hacked, the custom claim would be collected, and the insurer might arrange funding for tech support to secure the systems that were exploited."

Have you or your company considered cyber-insurance? Please feel free to share your thoughts/experiences by way of comment on this blog post.


neil gunn said...

Great post about identifying the need for cyber insurance. I am involved with a company based in the UK that specialise in offering websites insurance and cyber cover. In most cases website owners are simply unaware that such insurance exists.

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