INSURING TECHNOLOGY EXPOSURES

The commercial marketplace has moved with increasing speed to electronic data as the record of choice, if not necessity. As with any rapidly evolving business, the technology sector has encountered a variety of unforeseen exposure issues in the event of experiencing a data security breach resulting from the failure of network computer security to protect confidential data.

The exposure to loss from a breach of electronic security can be caused by electronic viruses or worms, which are malicious pieces of software that infect and deliberately damage a computer system; or hacking, which is a deliberate breach of security involving unauthorized access to a computer system often with the intent of stealing data or money. Data attacks are growing at almost as rapid a pace as the conversion from paper to electronic media.

The competition between data security specialists and those who attack electronic data systems is an ongoing contest. The attacks can occur deliberately or inadvertently, from outside persons or from disgruntled employees. There are also various governmental standards regarding electronic data security of which insureds may not even be aware, but which nonetheless expose them to loss. No system is impregnable.

The exposure to loss from a breach of data security can range from the theft of cash to theft of confidential information, to cyber extortion, to property and equipment damage coverage, to business interruption costs. The theft or corruption of intellectual property can also critically affect sensitive matters involving individual and corporate privacy as well as individual and corporate reputation and image.

In addition to the direct harm resulting from a cyber attack, all aspects of responding to a breach of security are expensive and time consuming to repair and recover from.

One does not have to be a data processing firm to have significant exposure to loss. Almost any business that uses computers, including service industries, has a substantial exposure. Medical services, retail businesses, professional service firms, internet businesses are all at risk. The standard property and casualty insurance policy likely provides little if any protection against cyber assault.

Benchmark represents a number of quality insurance providers (AM Best rating of A- or greater) who have developed and are offering insurance products designed to transfer the risk of loss from compromised data processing systems.

Coverage can be designed to apply to technology firms who perform data processing services or to provide protection to the end user resulting from breach of the system.

As with all Errors and Omissions and Professional Liability related coverages, a detailed specialty application is needed in order that the insurance product can be most effectively constructed and most economically priced. Disclosure of corporate functions and detailed responses to the network security questions are critical. The applications are available on this website at the link Product Lines > Errors & Omissions (click here).

In today's high technology environment, including insurance protection against cyber liability hazards should be considered for virtually every insured.

Please contact Benchmark Management Group to discuss and address the cyber insurance needs of your clients. We will work with you to identify and offer state of the art insurance products to address those needs.