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Insurers Eyeing Cyber Coverage
Insurers are eagerly monitoring exponential growth in the tiny cyber coverage market but their lack of experience and skills handling hackers and data breaches may keep their ambitions in check.
High profile cases of hackers seizing sensitive customer data from companies, such as U.S. retailer Target Corp or e-commerce company eBay Inc, have executives checking their insurance policies.
Increasingly, corporate risk managers are seeing insurance against cyber crime as necessary budget spending rather than just nice to have.
The insurance broking arm of Marsh & McLennan Companies estimates the U.S cyber insurance market was worth $1 billion last year in gross written premiums and could reach as much as $2 billion this year. The European market is currently a fraction of that, at around $150 million, but is growing by 50 to 100 percent annually, according to Marsh.
Those numbers represent a sliver of the overall insurance market, which is growing at a far more sluggish rate. Premiums are set to grow only 2.8 percent this year in inflation-adjusted terms, according to Munich Re, the world’s biggest reinsurer.
The European cyber coverage market could get a big boost from draft EU data protection rules in the works that would force companies to disclose breaches of customer data to them.
“Companies have become aware that the risk of being hacked is unavoidable,” said Andreas Schlayer, responsible for cyber risk insurance at Munich Re. “People are now more aware that hackers can attack and do great damage to central infrastructure, for example in the energy sector.”
Insurers, which have more experience handling risks like hurricanes and fires, are now rushing to gain expertise in cyber technology.
“It is a difficult risk to price by traditional insurance methods as there currently is not statistically significant actuarial data available,” said Robert Parisi, head of cyber products at insurance brokers Marsh.
Andrew Braunbergon, research director at U.S. cybersecurity advisory company NSS Labs, said that some energy companies have trouble persuading insurers to provide them with cyber coverage as the industry is vulnerable to hacking attacks that could trigger disasters like an explosion in a worst-case scenario.
Pricing on policies for retailers has climbed in the wake of recent high-profile breaches at Target, Neiman Marcus, and other merchants, he added.
I.T. Spending On The Rise
Worldwide IT spending remains on track to increase by 6% in 2012 despite the grim economic conditions in Europe, thanks to strong software, storage, smartphone and tablet sales, according to IDC.
While 2012 has been a tough year for many IT vendors, they have done better overall than many expected in the first half of the year, IDC said.
For example, software spending has been robust, even in parts of the world where the economy has been weakest, as businesses hope software tools and applications will help them implement cost-reduction strategies.
The 6% growth compares to a 7% increase in worldwide IT spending last year. IDC expects 6% growth in 2013.
Software, storage, enterprise network and mobile device markets have offset weaker sales in servers, peripherals and PCs. However, the launch of Windows 8 during the fourth quarter should help the PC market recover next year, IDC said.
U.S. IT spending will grow by 5.9% in 2012, compared to 8.5% last year. However, the strength of the dollar during the first six months of the year means that IT spending in dollar terms will grow just 4% for the full year.
HP Makes Changes At The Top
HP has appointed former Boeing Company executive John Hinshaw as CIO.
In the newly created role of EVP of Global Technology and Business Processes, Hinshaw will oversee IT and shared and administrative services, including indirect and services procurement. Hinshaw also will be in charge of optimising business processes across the company.
Hinshaw was previously VP and general manager of Boeing Information Solutions at The Boeing Company, where he was responsible for running a new business.
Prior to Boeing, Hinshaw was SVP and CIO at Verizon Wireless. Earlier in his career he also served as a consultant with Accenture.
Hinshaw will join HP as a member of its executive council on 15 November, reporting to HP president and CEO Meg Whitman.
Meanwhile, HP also announced that Craig Flower has been promoted to SVP and CIO. Flower will be responsible for data management, application architecture, global business intelligence, sales, and product development and engineering applications. Flower has held a wide range of IT management positions within HP since 1984.