Cyber Insurance

3. BIG DATA BIGGER RISKS
Increased use of electronic data - Smart phones,
laptops, credit cards
Cloud Computing - Concentration of large
amounts of data in one place
Stringent laws related to data breach –
Section 43 A IT ACT (India), Sectorial laws
regulation by SEBI and RBI (India ), The Financial
Services Modernization Act (U.S.) HIPAA (U.S.),
EU directives
Too Big to fail ……?– No. of records
compromised
1.Ebay – 145 Mn
2.Target – 70 Mn
3.Adobe – 152 mn
4.Sony PS– 77 Mn
5.Yahoo Japan – 22 Mn

4. WHAT TRIGGERS A BREACH ? • BP employee loses laptop containing data
on 13,000 oil spill claimants.
•Malware installed in Target’s payment
system. 40 MN credit card numbers compromised.
•A phishing email disguised as originating from the
RBI, promised its recipient prize money of Rs.10 Lakh
within 48 hours, by giving a link which leads the user
to a website that resembles the official website of RB
with the similar logo and web address.
Source: Ponemon Institute© Research Report
2013

5. Growth of data breach
• 253 network breaches in 2013 as against 208 in
2011
• Eight breaches in 2013 exposed more than 10
MN identities as against 5 in 2011
• In total 552 Mn identities were breached in
2013
It is no longer an IT issue but an active
business risk
VICTIM COSTS
Notification
Call Center
Identity Monitoring (credit/non-credit)
Identity Restoration
DIRECT COSTS
Discovery/Data Forensics
Loss of Employee Productivity
INDIRECT COSTS
Restitution
Additional Security and Audit Requirements
Lawsuits
Regulatory Fines
OPPORTUNITY COSTS
Loss of Consumer Confidence
Loss of Funding
$14.00
$10.00
$40.00
$140.00
Cost per record:
$204
© Ponemon Institute

6. Real life incidents
1. Commercial bank (over $5B in revenues, over
$200B in assets)
Lockbox containing backup tapes were lost in transit with
tens of millions of personal data
Over $10MM in crisis management has been paid to
date
Consumer class action suit has been brought
2. Online retailer (over $5B in revenues)
Hacker accessed a server and obtained personal
information of over 17 million customers
Posted 2,000 records on a blog as proof and demanded
over $1MM to not release the data
To date over $1.5MM spend on Crisis Management
expenses including notification and forensics
Two class actions have been filed
3. Internet services company (about $1.5B in
revenues)
Unauthorized access led to viewing and
downloading of personal information
Multiple class actions have been filed
Over $200,000 to date in defense
4. Credit card processor (over $1.5B in
revenues)
Employees allegedly accessed customer
information of a client to make fraudulent
transactions

7. CYBER CRIME INSURANCE VS
OTHER LIABILITY POLICIES
Let’s look at some policies which are usually
bought to manage business exposures.
I.Errors and Omission
II.Commercial General Liability
III.Crime Insurance
Coverages PI/CGL/Crime
insurances
Breach response costs No
Legal liability to others for
loss of data
Partial
Intellectual property
infringement
Partial
Loss of revenue due to
network breach
No
Regulatory investigations
and civil fines and penalties
No
Cyber Extortion No

8. HOW THE CYBER POLICY
OPERATES ?
Breach response costs
Proactive forensic services, credit monitoring
and cost of recreating data
Crisis Management Expense
Business interruption losses due to breach
Ransom and security consultant costs
Legal fees in connection with investigation
Fines resulting from regulatory investigation
 Liability of Loss of confidential information
of individuals as well as corporates
 Failure of network and information
security to prevent the transmission of
computer viruses or the penetration of a
hacker
 Infringement of a copyright by your
website content
Professional Indemnity Insurance
HOW THE CYBER POLICY
OPERATES ?
Breach response costs
Proactive forensic services, credit monitoring
and cost of recreating data
Crisis Management Expense
Business interruption losses due to breach
Ransom and security consultant costs
Notification costs
Fines resulting from regulator
FIRST PARTY THIRD PARTY

9. WHO ARE THE VICTIMS?
Businesses should buy Cyber insurance if
Their business activity is dependent upon IT
systems
Confidential data is handled in the course of
business
They have significant online presence and
operations
They process electronic payments
Are required to do so contractually

10. HOW CAN PRUDENT ASSIST ?
Prudent has a specialist team of risk advisors including
6 dedicated liability lines professionals and 3 lawyers
as full time employees
We can help you in
Arranging a review of the your IT systems through
security experts
Identifying gaps in your current insurances
Designing a customized coverage solution for your
cyber insurance needs
Arranging the most cost effective cover from
insurance and reinsurance markets
Ensuring contract compliance from an insurance
perspective
Assisting you with the claims management in case of
such an even
Insurance
Retention

11. Ajit Singh Dhingra Managing Director
Ajit@PrudentBrokers.com
Pavanjit Singh Dhingra Chief Executive Officer
Pavan.Dhingra@PrudentBrokers.com
Alda Dhingra Vice President - International Businesses
AldaDhingra@PrudentBrokers.com
Vijay Rampal Senior Vice President & Principal Officer
Vijay.Rampal@PrudentBrokers.com
Sanjay Vig Vice President - Liability & Specialty Lines
Sanjay.Vig@PrudentBrokers.com
Vikas Singh Vice President - Reinsurance
Vikas.Singh@PrudentBrokers.com
Mandar Dalvi Vice President - Reinsurance, Structured Products & Advisory
Mandar.Dalvi@PrudentBrokers.com
H V Karkare Vice President - Reinsurance
HV.Karkare@PrudentBrokers.com
Tanuj Gulani Vice President - Specialty Lines
Tanuj.Gulani@PrudentBrokers.com

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