In the event of a cybersecurity breach, any company with a cyber insurance policy should contact their carrier as soon as possible. One of the first steps the cyber insurance carrier will take is to hire a forensics company to investigate the breach. Digital forensics is one of the more expensive aspects of most cyber claims, with costs typically ranging from $20,000 to $50,000.
There are recognized patterns of higher risk. For example, Hurricanes and earthquakes do catastrophic damage to a specific geographic area. These natural disasters pose unique risks to insurance companies as a result of that history. If an insurance company insures at lot of this type of risk, it can face massive losses and have its financial stability threatened. For this reason, insurance companies try to avoid insuring too many homes or businesses (for this example) in an at risk area for hurricane or earthquake damage. While this helps keep insurance companies financially sound, it can make coverage harder to obtain for those who need it most.
The problem of Social Engineering techniques called Phishing, Whaling, Spear Phishing, Pharming, or Impersonation Fraud has become significant and widespread in recent years. The insurance industry has made efforts to keep these risks in mind for cyber liability policies. Sometimes there is language added that will protect a company, but sometimes communication is added to a basic policy that would not protect a business against these specific risks.
When people think of cyber losses and cyber insurance, they tend to think of privacy breaches. The exposure of personally identifying information and concomitant risk of identity theft, which is followed by notification costs and regulatory fines is a recognized threat. More and more, though, the interruption of day to day business is the highest cost of a breach. These losses can lead to lost sales, lost productivity, reputational damage, and missed deadlines leading to breach of contract.
More and more companies are purchasing cyber insurance as the risks to the company’s businesses from the breach of their networks expand. More companies are also requiring that their vendors and contractors obtain cyber insurance to protect themselves from breaches caused by third parties. As the cyber insurance market place grows, it’s important for companies to know what they get with their cyber insurance policies to maximize the advantage of their purchase.
Ransomware continues to be a popular tool among hackers and cyber criminals. By locking users out of their own systems, these cyber criminals can extort significant payments from companies who risk losing way more money due to the interruption to their business. Traditionally, the number one target of ransomware attacks has been the healthcare industry due to the incredibly time-sensitive nature of their business. Recently however, hackers have focused their attacks on industrial businesses which is bad news for product manufacturers and physical plants.
When people think of property insurance, they often immediately think of buildings – things like houses, retail stores, or warehouses. If they continue the thought further, they may think of additional items of property like furniture or inventory. These items have a very real physical presence, and that physical presence subjects them to potential damage or loss from known hazards like a fire or water damage. Property insurance exists to protect individuals and companies from that loss.
The Dark Overlord hack stands at the intersection of a number of prominent issues in the modern world: terrorism, cyber warfare, confidentiality and privacy. On New Year’s Eve, 2018, a group of hackers calling themselves Dark Overlord stated they had hacked confidential legal files related to the insurance litigation that followed the 9/11 attacks. The hackers demanded a ransom from the law firm from whom the information was stolen. Apparently, the ransom was paid but the law firm breached the terms of the ransom by reporting the breach to law enforcement. Now the hackers have threatened to sell the information online through the dark web.
The cyber market has evolved incredibly in a few short years. It’s been barely more than twenty years since the internet became a ubiquitous presence in the lives of most Americans. As cyberspace has grown, the risks attendant on cyberspace has grown as well. To meet the challenges of combining scope and risk, legislators and courts have had to move quickly to regulate this area and protect individuals from loss. At the same time, insurance companies have had to tailor policies to protect companies from the risks of doing business online.
Within the context of cyber security, one most always discusses the subject in exponentials; Whether considering the number of breached records, the amount of damage, or the size of data leaks. What was groundbreaking three years ago in volume will seem quaint by the end of the year. A host of news stories regarding the 2013 and 2014 data breaches at Yahoo Inc. over the past few months have underlined this aspect of the conversation about cybersecurity. It serves as a stark reminder that companies need to keep an eye on their cyber risks and seriously consider purchasing cyber insurance if they have not done so already to survive this increasingly harsh ecosystem.