Cyber attacks have been in full force lately. If you work in cyber security you are surely familiar with the phrase “there are two types of businesses, those who have been breached and know it, and those who have and do not.”. The amount of cyber breaches in the past two years has skyrocketed and most likely will continue to.
We put a lot of it out there ourselves through our Social Media pages and sites we visit. All of that information makes it very easy for online predators to break into our accounts and reek havoc on our lives.
In a recent article by the New York Times it was stated that Cyber Insurance is the “fastest growing niche in the insurance industry today.”. According to Elizabeth Harris and Nicole Perlroth: “After the breach at Target, its profit was cut nearly in half, down 46 percent over the same period the year before, in large part because the breach scared away its customers.”
The damage this brings to a brand’s reputation are of high impact. It takes a long time to regain consumers trust. It also makes it hard for these companies to get as much cyber risk coverage as they want. The Times cites statistics showing a 21 percent increase in demand for cyberinsurance policies from 2012 to 2013, with total premiums reaching $1.3 billion last year and individual companies able to acquire a maximum of roughly $300 million in coverage.
Cyber Insurance policies vary just like any other insurance policy. The most comprehensive policies will cover and reimburse all immediate cleanup costs. That can involve hiring a forensics firm, alerting customers, offering to pay for free credit monitoring to all of those impacted by the cyber attack, setting up call centers and possible legal fees caused by this.
Although it can get much more costly and involved than that.
“There is no real way to put empirical data on what the value of a brand is post-breach, during a breach and prior to a breach,” said Michael Tanenbaum, senior vice president of ACE Professional Risk, part of Ace. “We are about science and math, and you just can’t get your arms around it. And two people can’t always agree on whether a brand has been diminished.”
To regain consumer confidence, Target announced that it would speed the adoption of more secure chip-and-PIN technology in its stores and for its branded debit and credit cards, a step it estimates will cost $100 million. That expense is not covered by its insurance policies.
“Most companies think their policy will cover them from all cyberevents, but in reality it only kicks in in a sliver of breach events,” said Jacob Olcott, a cybersecurity expert at Good Harbor Security Risk Management, which advises companies on the risk.