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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.
Did A Hacker OD?
Top hacker Barnaby Jack died from mixing too many drugs in one session, a coroner’s report shows. Kiwi-born Jack was supposed to give a talk at a security conference when he was found dead in his bed.
Conspiracy nuts raised an eyebrow or two when it was revealed that Jack’s death occurred shortly before he was due to demonstrate how heart implants could be hacked at the Black Hat security conference in Las Vegas. He did not have a mark on him and showed no signs of trauma. However, now a coroner’s report has shown that Jack had a mix of heroin, cocaine and prescription drugs in his system. And he died of “acute mixed drug intoxication.”
Jack rose to fame after a 2010 demonstration, in which he hacked a cash machine, making it give out money. Jack’s girlfriend had found him lying in bed unresponsive, with “multiple bottles of beer and champagne” in the rubbish bin, so it must have been a hell of a night.
HP Exec Claims Evidence Was Falsified
HP has been accused of producing “false and fabricated” evidence against a former sales executive who the firm claims stole confidential information.
Adrian Jones, who was a sales executive at HP, left the firm to join Oracle in February 2011. HP claims that Jones nabbed a load of confidential information between 10 and 11 February using a removable hard drive. Jones told the court that the hard drive was used by HP for backup and was never in his possession, saying that HP and its outside counsel have confirmed these facts.
Jones’ current employer Oracle said that the accusations leveled at its employee are simply not true, with Deborah Hellinger, a spokeswoman for Oracle telling Bloomberg, “The central allegation in HP’s employment lawsuit against Adrian Jones has turned out to be complete fiction…. If they did it knowingly then HP and their lawyers should be sanctioned. If they did it mistakenly then they simply owe Mr Jones an apology.”
HP is said to have probed Jones’ relationship with a female subordinate, for whom Jones allegedly arranged a 94 per cent pay rise and expensed travel that had no business purpose.
Jones’ case mirrors that of former HP CEO Mark Hurd who left the company after similar expense discrepances were brought to light. Hurd, a close friend of Oracle CEO Larry Ellison, then joined Oracle as co-president within weeks of leaving his post at HP.
HP and Oracle have been going at it hammer and tongs in a largely public row over Oracle’s decision to dump support for Intel’s Itanium architecture. The two companies are in various other legal battles as well, with HP claiming that Oracle had gone from being a partner to a “bitter antagonist”. We assume the next lawsuit will claim that Oracle stole HP’s lunch money and beat it up behind the bike shed, or perhaps the other way around.