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The Pitfalls of Cyber Insurance
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REISEN1955
REISEN1955,
 User Rank: Ninja
8/21/2017 | 12:43:23 PM
Insurance?
If I was an under-writer evaluating a business for coveage, I would first want to closely examine in detail CURRENT backup plans and disaster continuity plans to ensure that basic, good protocols are being followed.  I would want to know if the network is buttoned up tight - that the servers are secure and that other protocols, such as HIPAA, are being observed.  I would want to see user education plans too.  Only IF the house is locked, tight and solid would I ever CONSIDER writing a policy and that would also be up for review every 3 months.    Knowing standards as they are today, I would probably be writing very FEW policies. 
mcdanielsc
mcdanielsc,
 User Rank: Apprentice
8/21/2017 | 4:09:00 PM
Re: Insurance?
Insurance premiums would undoubtedly be higher than current rates if underwriters evaluated companies as you're recommending.
REISEN1955
REISEN1955,
 User Rank: Ninja
8/23/2017 | 11:07:58 AM
Re: Insurance?
True - have no idea what current rates are though.  This is a relatively new fad and I think written for cowards in the IT staffing department - when management has zero faith in what they are doing!   How many employers take out insurance, in geneal, to protect employees from failing to do their jobs????
mcavanaugh1
mcavanaugh1,
 User Rank: Moderator
8/25/2017 | 8:45:28 AM
Re: Insurance?
While the article is better than most when it comes to the topic the information is still not entirely accurate.  There are carriers that are guilty of providing "skinny" coverage forms however the same can be said for many E&O carriers just trying to get some quick premium.  To generalize the entire marketplace based on a couple cases where coverage was not provided is misguided.  In the case of P.F. Changs, the policy did not include coverage for PCI fines & penalties because the agent/broker that placed the business did not include the coverage when they offered terms from Chubb.  The reference to the Ameriforge case is even worse because the claim involves a crime insurance policy, not a cyber insurance policy! These types of errors fall mostly on the part of the agent & broker that helped place the business for not obtaining or presenting the right coverage to the purchaser of the policy.

From a policy perspective, a comprehensive stand-alone cyber insurance policy will include coverage for the breach of PII/PHI, Cyber Extortion (including ransomware & other extortion events), business interruption & lost income from an event, and lost revenues as a result of your vendor suffering an attack impacting your business all with a minimum premium of $1,000 for a 1M limit.  The rating basis for premiums is a combination of the revenues, operations/industry and (if available) the number of records being stored.  For example, a 100M manufacturer is going to be seen as a lower risk than a 10M healthcare practice because of the nature of information and regulatory environment on the healthcare side.

The fact of the matter is that these policies should not be seen only as an insurance policy.  A good policy should be used as a service to make your company a better risk.  Coverage with the right insurance carrier can include risk management in the form of portals & webinars with others going so far as to offer proactive risk management in the form of consulting, active monitoring, table tops, and pentesting as a part of the policy.  No matter how good an IT department can be there is no way to solve the problem of IT & Cyber security, especially when it comes to the human element, but the problem and risk can be managed.  Similar to having a general liability or E&O policy, a cyber insurance policy should be seen as a way to round out a company's risk management.
Joe Stanganelli
Joe Stanganelli,
 User Rank: Ninja
8/25/2017 | 7:31:12 PM
Re: Insurance?
@REISEN: To be fair, most if not all of this is exactly what cyberinsurance carriers do. Granted, however, the standards/procedures are way different between small businesses (who typically just have to fill out a form) and large enterprises (which have to undergo actual audits).
Joe Stanganelli
Joe Stanganelli,
 User Rank: Ninja
8/25/2017 | 7:34:10 PM
Re: Insurance?
@REISEN: Doctors and lawyers -- even the very best -- typically have malpractice insurance as a matter of course. And most companies have some form of umbrella policy at the very least as a matter of course. Drivers have auto insurance as a matter of course (sometimes as a matter of law, albeit). It's a bit hard for me to agree that cyberinsurance is for cowards just because it goes to things you should be doing anyway.

Bad things happen. That's what insurance is for.


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