Cyber insurance: Growing pains

9 February 2017 Transforming healthcare Michael Schmitt

• Target Corporation (2013) – 110 Million records compromised

– $240 million cost of reissuing cards and refunding fraudulent charges

• Anthem (2015)– 69 million to 80 million records compromised

– $140 million estimated cost to manage breach

• FriendFinder (2016) – 412 million accounts compromised

• Yahoo! (2013)– 2016 public disclosure

– 1 Billion accounts compromised

– Names, dates of birth, email addresses, security questions and answers and weakly protected passwords

Cyber Incidents Headlines

4

7

Residual Cyber Cover

• Travelers Indemnity vs Portal Healthcare Solutions (2015) – Coverage: Data leaked = Publication

• Zurich American Insurance Co. vs Sony Corporation of America (2014)– No Coverage: Data Leak ≠ Publication

• State Auto P&C Insurance Co. vs Midwest Computers (2001)– No Coverage: Data ≠ Tangible Property

• Eyeblaster, Inc. vs Federal Insurance Co. (2010)– Coverage for Tangible Property (computer)– No Coverage for Intangible Property (data)

• NMS Services, Inc. vs The Hartford (2003)– Coverage: Data = Tangible Property. Business Interruption Cover provided.

Cyber Cover in GL Policies

8

•Guidance suggested for carriers:

1)Investing in cyber expertise

2)Setting clear appetites and strategies

3)Continuous oversight or management of “silent” cyber risk

Prudential Regulation Authority

9

Swiss Re Corporate Solutions Cyber Offering

10

•Business Model vs High-End Security

•Consolidations & Mergers

•Budgeting & Staffing

•Medical Devices

•The Value of PHI

Cyber Underwriter Areas of Concern

12

14

• Target Corporation (2013)

– 110 Million records compromised

– $240 million cost of reissuing cards and refunding fraudulent charges

• Anthem (2015)

– 69 million to 80 million records compromised

– $140 million estimated cost to manage breach

• FriendFinder (2016)

– 412 million accounts compromised

• Yahoo! (2013)

– 2016 public disclosure

– 1 Billion accounts compromised

– Names, dates of birth, email addresses, security questions and answers and weakly protected passwords

Cyber Incidents Headlines

4

7

Residual Cyber Cover

• Travelers Indemnity vs Portal Healthcare Solutions (2015) – Coverage: Data leaked = Publication

• Zurich American Insurance Co. vs Sony Corporation of America (2014)

– No Coverage: Data Leak ≠ Publication

• State Auto P&C Insurance Co. vs Midwest Computers (2001)

– No Coverage: Data ≠ Tangible Property

• Eyeblaster, Inc. vs Federal Insurance Co. (2010)– Coverage for Tangible Property (computer)– No Coverage for Intangible Property (data)

• NMS Services, Inc. vs The Hartford (2003)

– Coverage: Data = Tangible Property. Business Interruption Cover provided.

Cyber Cover in GL Policies

8

•Guidance suggested for carriers:

1)Investing in cyber expertise

2)Setting clear appetites and strategies

3)Continuous oversight or management of “silent” cyber risk

Prudential Regulation Authority

9

Swiss Re Corporate Solutions Cyber Offering

10

•Business Model vs High-End Security

•Consolidations & Mergers

•Budgeting & Staffing

•Medical Devices

•The Value of PHI

Cyber Underwriter Areas of Concern

12

14

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