Homeland security chief selling cyber insurance
According to the Financial Times, the U.S.’s first ever homeland security chief, Tom Ridge, is teaming up with Lloyd’s of London to launch an insurance company that will specialize in corporate cyber security policies.
Ridge is forming the venture to close what he calls a ‘dangerous’ gap in cyber coverage.
He revealed the plans yesterday just days after the threat to corporate IT systems was reinforced by the news of a huge data breach at JPMorgan Chase.
The attack on JPMorgan Chase compromised the contact details of 76 million households.
Three thousand U.S. companies were hacked last year, according to the Center for Strategic and International Studies. Cyber-crime costs the global economy more than $400 billion a year, it estimates.
According to David Lak, a senior risk consultant with Risk Services Division HUB International, 36 per cent of Canadian companies surveyed had experienced one or more cyber-attacks that breached networks during the previous 12 months.
“Only once senior management understands the potential financial impact of a data breach will they be able to complete a cost/benefit analysis of upgrading their current cyber risk program,” Lak told Insurance Business.
Even in the U.S., by far the largest cyber insurance market in the world, brokers estimate that only about one in four companies has some form of coverage. Insurers write little more than $2.5 billion worth of premiums a year.
Ridge, whom former President George W. Bush appointed to take charge of U.S. domestic security soon after the terrorist attacks of 2001, argues that existing cyber threat evaluations tend to follow a “check-the-box” approach.
As well as selling them insurance, Ridge Insurance Solutions will pledge to offer companies more thorough risk assessments, highlighting vulnerabilities in their systems.
“This is not just about insurance but helping and incentivizing companies to manage their cyber operations more effectively,” Ridge told the Financial Times.
The company, based in Washington, will focus on covering small and medium-sized enterprises that will be able to purchase policies covering costs arising from cyber-attacks of up to $50 million.
by Insurance Business | Oct 08, 2014