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Cyber Risk Insurance
Some Statistics
• Privacy Rights Clearinghouseo From 2005 – February 19, 2013 = 607,118,029 records reported breached.
• Ponemon Instituteo The 2011 Cost of Data Breach Study, the average per capita cost of data breach
was $194 per record.
• 2012 Data Breach Investigations Report by Verizon RISK Teamo 98% of data breaches caused by external agents (a majority by criminal
factions) o Most data breaches discovered by third parties could have been prevented
without employing difficult or expensive measures
• Gartner Groupo 1 laptop stolen every 53 seconds in the U.S.
Cyber Risk Exposures
• Third Party Exposureso Infringement of copyright, trade mark, trade dress, etc.o Defamationo Invasion Of Privacy Rightso Release Or Disclosure Of Personal Informationo Transmission Of Computer Virus
Cyber Risk Exposures
• First Party Exposureso Virus/Denial Of Serviceo Business Income/Extra Expenseo Damage Or Destruction Of Electronic Datao Reputational Damageo Data Breach o Cyber Extortion
Potential Gaps In Traditional Coverage
•Bullet oneo Sub bullet one
General Liability Property
Errors & Omissions Crime Cyber
Data Security Breach Possible Possible PossibleCoverage Generally Unlikely
Coverage Generally Likely
Virus/Hack Possible Possible Possible PossibleCoverage Generally Likely
Denial Of Service Attack
Coverage Generally Unlikely
PossibleCoverage Generally Unlikely
PossibleCoverage Generally Likely
Extortion ThreatCoverage Generally Unlikely
Coverage Generally Unlikely
Coverage Generally Unlikely
Possible Coverage Generally Likely
Regulatory DefenseCoverage Generally Unlikely
Coverage Generally Unlikely
PossibleCoverage Generally Unlikely
Coverage Generally Likely
Business Interruption
Coverage Generally Unlikely
Possible PossibleCoverage Generally Unlikely
Coverage Generally Likely
Breach NotificationCoverage Generally Unlikely
Coverage Generally Unlikely
PossibleCoverage Generally Unlikely
Coverage Generally Likely
Cyber Policies
• Stand alone policies (i.e. not part of a package)o Starting to see “roll-on” coverages in other products, including BOP, D&O other
professional liability products
• Combination of first and third-party coverages• Claims-made • Defense within limits• Retroactive dates• Aggregate limits
Cyber Policies
Common Coverages:o Web Site Content Liability
o Security Breach Liability (incl. regulatory defense)
o Programming Errors and Omissions Liability
o Replacement or Restoration of Electronic Data
o Extortion Threats
o Business Income and Extra Expense
o Public Relations Expense
o Security Breach Expense (remediation)
Cyber Policies
Other Coverages:oRegulatory Fines and PenaltiesoMediao (Tech E&O)oRogue EmployeeoTelephone Toll FraudoComputer and Funds Transfer Fraud
Cyber Policies
Typical policy limits $2.5 - $10 million
Larger placements $25+ million
SIR’s
Premium drivers may include:o Type of industry – risk classification o Type of content publishedo Type of personal information collectedo Number of records storedo IT security protocols
Thank YouRobert Olausen
Manager, Specialty Commercial Lines
ISO – Insurance Programs and Analytic Services
545 Washington Boulevard
Jersey City, NJ 07310
201-469-2817
No part of this presentation may be copied or redistributed without the prior written consent of ISO. This material was used exclusively as an exhibit to an oral presentation. It may not be, nor should it be relied upon as reflecting, a complete record of
the discussion.
