Hacking Threat Promises Insurance Boom
European Insurers have had a hard time finding a market among companies in relation to Cyber Crime. However, this may be changing in the future. For example, Sony suffered a huge data leak recently, giving hackers access to the entire database of PlayStation 3 customers. The European Union is working on new regulatory requirements which threaten to pose large fines on companies which are unprepared. In the USA, the cyber insurance market has grown to over £647,165,000. Europe still hasn’t followed in their footsteps despite the rise in high profile (and expensive) hacking incidents. That being said, it did take the US over a decade to start cranking up their cyber insurance policies, despite them being available for many years prior. Stephen Wares, a specialist in cyber risk at insurance broker Marsh said: “If I was to compare the UK and European market now with the US market, we are where they were back in 2004 to 2005.”
European lawmakers are promising to impose bigger fines for firms that lose data. Hackers are now becoming more aggressive with their data mining for sensitive and personal information, which is opening a huge market for data loss insurance. In January, the Information Commissioners Office fined Sony £250,000 after discovering that the attack could have been prevented if the company’s software was up-to-date. The European Commission is also hoping to reform the 2014 data protection rules which would allow for much larger penalties for firms that have not met the legal standards. These fines could be as much as 2% of the firm’s annual turnover.
According to a recent UK Government report, 93% of businesses employing more than 250 staff had a cyber-security breach in 2012. The affected firms saw an increase of attacks by 50% compared to the previous year. Matthew Webb, an underwriter at Hiscox said: “We’ve got a specific head of data risks in the UK organisation and we’re skilling-up our cross-class underwriters to handle data risk. We’re constantly monitoring the situation”.
If you have any Insurance queries, feel free to contact us on 0845 838 5195 or message us directly via the Contact Us page.
James Savery, 20 June 2013