Cyber requires a comprehensive solution

Such is the potential impact of a cyber security breach on a company’s reputation that there is a demand for insurance solutions that provide a raft of extra services to help deal with the consequences of a breach.

Speaking exclusively to Intelligent Insurer at this year’s Airmic conference, Dan Hopkinson, underwriter, technology, media and business specialty lines, said that there has been a steady rise in demand for Beazley’s innovative and comprehensive package.

“The insurance offering we have put together is very much like kidnap and ransom in that it’s not just insurance products – it’s very heavily serviced,” he said.

Beazley’s offering includes the services of privacy lawyers, IT forensics and a host of other service providers and help organisations in the event of a breach, including notification companies, mailing houses, a call centre, and data and credit monitoring companies.

“We started writing this in the US in 2008,” he said. “We found that for most companies it will be the first time they’ve handled a breach and the speed you have to work at is phenomenal – if the data’s gone, it’s gone.”

Such is the appeal of Beazley’s approach that technology companies seeking guidance on how to handle breaches have approached them for insights.

“Even they acknowledge you can’t be 100 percent secure,” he said. “It’s about having a plan in place, which is what we work on with our insureds to help them go through the process of handling that breach once it’s happened.”

Beazley was the first insurer to bring services in as part of the solution, and their product – Beazley Breach Response – is structured so that the service provision sits separately from the main tower of liability.

“This means insureds can access those services knowing that they’re still going to have a full tower of liability intact if somebody brings a claim against them,” he said. He added that 80 percent of our activity on these policies involves the use of the services part of the cover.

“Our breach services team are privacy specialists who are there to be proactive and work with the client and help them through the process of handling an incident once it occurs, and to be almost an extension of their in house team.”

Asked for his view of the future, Hopkinson predicts that the market for this type of cover will grow significantly as awareness and actual experience of breaches increase.

“We look at every risk on the basis that we believe they are going to have an incident at some point,” he said.

“You can’t offer 100 percent security because it’s not just the hacker trying to get in, it could be a rogue employee, it could be a simple operational mistake maybe a left laptop or a stolen laptop – lots of things can occur that cause an issue for an organization that they have to respond to.”

As more insurers move into the cyber arena, he said that their success will depend on their ability to keep pace with changes.

“Innovation will continue and will drive who has the success and who doesn’t, like it does with any line of insurance,” he said. “I think the market is going to be big enough for there to be a few main players.”