October 22nd, 2014

Cyber Insurance

Posted at 1:00 AM ET

Cyber insurance has grown out of recognition that cyber-crime and data privacy are among the most concerning risks facing organizations today. With the increasing severity and frequency of cyber-attacks and data breaches worldwide, the demand for cyber-specific insurance is growing. Cyber-related risk to critical infrastructure and the overlap with cyber-terrorism are also issues that have come to the forefront.

“Cyber” is perhaps a misleading term to describe the type of cover offered by this product. The term generally describes a number of different modules that provide cover around an organization’s computer system, data and other multimedia activities. These covers are normally designed to include the following in some form or another:

Data privacy

  • Third party liability 
  • Liability from disclosure of confidential commercial and/or personal information (privacy) 
  • Liability from economic harm suffered by others from a failure of network security

Regulation breaches, fines, and penalties

  • Defense of regulatory action due to breach of privacy regulation 
  • Coverage for fines and penalties due to breach of privacy regulation

Network business interruption

  • Income loss and expenses incurred during the period of interruption following a computer system failure or breach of network security
  • Extensions can cover business interruption caused by the outage of a service provider, when caused by a computer failure or network security

First party loss - data damage and cyber extortion

  • Destruction, corruption or theft of electronic information assets and/or data due to failure of the computer system or network
  • Threats or extortion relating to release of confidential information or breach of computer security

Crisis management and identity theft response

  • A number of costs associated with managing the aftermath of a privacy breach including, but not limited to: forensic investigation, legal costs, notification costs, call center costs, credit monitoring costs (where identification is stolen and a line of credit is obtained) and public relations costs


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