A brief history of Cyber Insurance Cover
In the early 2000s, just around the time of the Dot Com Boom, some insurers stood up, took notice and began to develop a product designed to address the financial loss that might arise out of data breaches. This was at a time where most companies were just beginning to realise the economic potential of the Internet. At this time insurers were looking to target the big dotcom companies such as Amazon, Yahoo, eBay and Google.
Early cyber policies included Liability & Property Modules. The liability cover addressed claim expenses and liability arising out of a security breach of the insured's computer systems, although some early policies only covered technical security breaches. The property-related modules covered business interruption and data asset loss or damage arising out of a data breach with additional first party covers including such things cyber-extortion coverage. Unfortunately for the insurers it was not easy to get people to understand the need for this coverage and this still remains a challenge today, but it is now certainly a lesser challenge with all of the security and privacy news that's constantly streaming.
One change that has occurred over time and has had a significant impact concerning the frequency and magnitude of data breaches is organised crime. In the early 2000s hacking was more of an exercise in annoyance or used for bragging purposes. Hackers at that time wanted their exploits talked about and known as well as the notoriety for hacking into or bringing down sophisticated businesses.
The real criminals, of course, are less interested in such notoriety. In fact, when trying to steal millions of records to commit identity theft or credit card fraud it is much better for them not to be detected. Recognising that this type of crime is low risk with high reward. Nowadays the sophistication of the cyber criminals has effectively resulted in a relentless crime machine constantly attacking and looking for new ways to attack, and always seeming to be one step ahead of those seeking to stop them. That is why we here about security and privacy breaches practically every day in the newspaper and in the media.
Today Cyber Insurance is a much more established market with more carriers now looking to provide the appropriate cover for businesses of all sizes who are now beginning to see Cyber Insurance more as a mandatory purchase rather than discretionary. As the world continues to change at an alarming rate cyber risks increase with the advent of such things as hacktivism and the monstrous amount of people using social media, the need for Cyber Insurance is also growing. With competition pushing cyber insurance prices down, and significant security and privacy risk being retained by organizations, risk transfer is becoming even more attractive.
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