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As hackers go wild, cyber insurance gets expensive [video]

1 points by rectang 11y ago

rectang 11y ago
Perhaps skyrocketing insurance rates will eventually force better security practices on the tech industry. As the video explores, these risks were new and nobody knew how to price them. After absorbing several huge claims, now they have better information!
rectang 11y ago
TRANSCRIPT [Ron Beeson, Lockton] If you are retailer with a point of sale machine and you take customer credit cards, if you don't use something to encrypt, end-to-end, that credit card, you're probably going to find it very difficult now to get insurance. [Jim Finkle, Reuters] You hear a lot about cyber insurance, growing as an industry, but what about the rates? If you have a car and you get into auto accidents, you want to make sure that the other people on the road also have insurance -- but if they're not protected and there's an accident, that means that you'd have to pick up the costs. Cyber insurance covers costs associated with a cyber attack. If you're a company that has access to a large number of credit cards, your rates are likely to have gone way up in the past year. [Bob Paris, Marsh] The insurance industry has now absorbed several hundred-million-dollar losses in the retail and health-care space -- and for a relatively immature market as cyber is, having three or four hundred-million dollar losses is going to have an impact. [Richard Bortnick, Traub Lieberman Strauss & Shrewsbury LLP] The claims frequency and severity was not anticipated, because you had no historical model to build in. It's all new, and everybody's learning at the same time. [Ron Beeson, Lockton] That increase isn't going to work. And what you are now seeing is certain insurers starting to invest, and work with in partnership with silicon valley, with certain technology companies, to help better understand the risk that the underwriters are writing and price the risk. [Bob Paris, Marsh] It's an aggregation of things. Various regulatory environment, the FCC, big breaches -- that's when we started to see these huge purchasing trends start to change. Now the question is more about resiliency -- because the thought is, you're gonna get breached, you're gonna get attacked, but how capable are you, how resilient are you, to work through that event? [Richard Bortnick, Traub Lieberman Strauss & Shrewsbury LLP] As their premium rates go up, they'll probably increase prices to the consumer, and so it trickles down to the lowest denominator. I think at some point the government is going to mandate certain industries have cyber insurance. It'll become enterprise risk management to have the insurance. The alternative -- to be without insurance -- is to bet the business. [Ron Beeson, Lockton] Everyone should be investing in cyber security, regardless of whether you consider insurance or not. But it's important to understand that insurance does not replace that investment. [graphic] CYBER RISK -- Target expects insurance to cover $90 million of the $264 million of costs related to its 2013 attack. Home Depot expects $100 million in insurance payments toward $232 million in expenses from its 2014 breach.

1 points by rectang 11y ago

Perhaps skyrocketing insurance rates will eventually force better security practices on the tech industry. As the video explores, these risks were new and nobody knew how to price them. After absorbing several huge claims, now they have better information!

rectang 11y ago

TRANSCRIPT [Ron Beeson, Lockton] If you are retailer with a point of sale machine and you take customer credit cards, if you don't use something to encrypt, end-to-end, that credit card, you're probably going to find it very difficult now to get insurance. [Jim Finkle, Reuters] You hear a lot about cyber insurance, growing as an industry, but what about the rates? If you have a car and you get into auto accidents, you want to make sure that the other people on the road also have insurance -- but if they're not protected and there's an accident, that means that you'd have to pick up the costs. Cyber insurance covers costs associated with a cyber attack. If you're a company that has access to a large number of credit cards, your rates are likely to have gone way up in the past year. [Bob Paris, Marsh] The insurance industry has now absorbed several hundred-million-dollar losses in the retail and health-care space -- and for a relatively immature market as cyber is, having three or four hundred-million dollar losses is going to have an impact. [Richard Bortnick, Traub Lieberman Strauss & Shrewsbury LLP] The claims frequency and severity was not anticipated, because you had no historical model to build in. It's all new, and everybody's learning at the same time. [Ron Beeson, Lockton] That increase isn't going to work. And what you are now seeing is certain insurers starting to invest, and work with in partnership with silicon valley, with certain technology companies, to help better understand the risk that the underwriters are writing and price the risk. [Bob Paris, Marsh] It's an aggregation of things. Various regulatory environment, the FCC, big breaches -- that's when we started to see these huge purchasing trends start to change. Now the question is more about resiliency -- because the thought is, you're gonna get breached, you're gonna get attacked, but how capable are you, how resilient are you, to work through that event? [Richard Bortnick, Traub Lieberman Strauss & Shrewsbury LLP] As their premium rates go up, they'll probably increase prices to the consumer, and so it trickles down to the lowest denominator. I think at some point the government is going to mandate certain industries have cyber insurance. It'll become enterprise risk management to have the insurance. The alternative -- to be without insurance -- is to bet the business. [Ron Beeson, Lockton] Everyone should be investing in cyber security, regardless of whether you consider insurance or not. But it's important to understand that insurance does not replace that investment. [graphic] CYBER RISK -- Target expects insurance to cover $90 million of the $264 million of costs related to its 2013 attack. Home Depot expects $100 million in insurance payments toward $232 million in expenses from its 2014 breach.