an introduction to cyber liability insurance · the cyber risk phenomenon the incredible pace of...

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An Introduction to Cyber Liability Insurance Catherine Berry Senior Underwriter

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Page 1: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

An Introduction to Cyber Liability Insurance

Catherine Berry

Senior Underwriter

Page 2: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

What is cyber risk?

Exposures emanating from computer networks and the internet

Page 3: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

The Cyber Risk Phenomenon

The incredible pace of technology-based innovation has produced huge dependenciesand interconnectivities of companies and organizations around the globe.

This has brought about great efficiencies and enhanced business practices – but hasalso created a wave of new problems : cyber-crime, media liabilities as a result of onlinepublishing, and a heavy reliance on the uptime of the network, for example.

As a result, there are new business exposures faced by commercial organizations,primarily driven by continually evolving e-commerce laws. Cyber liability to Third Parties,Network Security, Commerce Business Interruption and Loss of Data are just some of thenew liabilities clients need to build into their risk management and risk transfer strategies

Page 4: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Cyber risks

• Natural disasters

• System failures

• Cybercrime

• Corporate and state espionage

Page 5: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Cyber risks

• Cyber warfare:• 5th domain of warfare

• 2011 US drone fleet hit by Stuxnet – sabotaged Iran’s nuclear development plans

• Cyber terrorism

• Cyber activism

Page 6: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Business risks

• Operational

• Financial

• Intellectual property:• Erosion of competitiveness in global economy

• Legal and regulatory: sanctions / pecuniary fines

• Reputational:• Public visibility can cause harm to company’s image, brand and reputation

Page 7: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Non-malicious digital risks

• Natural disasters• Employees:

• Human error• Multitude of networks• BYOD• Mobile storage devices• Social networking:

• Information leaked• Spread of malware• Engineered attacks• Reputational damage

Page 8: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Hacking motivations

• Demonstration of skill, thrill-seeking• Cyber theft and cyber fraud • Industrial espionage• Insider attacks• Extortion:• Cyber terrorism• Cyber warfare:• Activism

Page 9: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Impact of a data breach

• Directors & Officers liability • 2014 Verizon Data Breach Investigation• Costs arising:

• Forensics• Crisis communications• Legal• Reputational

• Impact on brand value

Page 10: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Data breaches

• HFT:• PCI compliant to level 1• 2m credit card details stolen• Forensics, PCI assessments, crisis communications and credit

monitoring, PCI fines and penalties• Total claim: USD10,690,000

• Target:• Suspected to be same hacking group and malware as HFT• Class actions: 80 to date• Estimated total claim: USD244m

HFT:HFT:

Page 11: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Data breaches

• Home Depot:• 56m credit / debit card details stolen• Malware inserted at POS• News broke when batch of cards put up for sale on Internet• Estimated total claim: in excess of USD500m

Page 12: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Comprehensive cover,modular solutionThe eRisk product has been specifically designed as a one-stopsolution for a variety of needs.

It meets the requirements of IT professionals looking forcomprehensive Errors & Omissions coverage combined with cyberliability; at the same time, it answers the need or organizations seekinga first-class insurance product, providing cyber liability coverage forthird and first party e-commerce exposures.

The eRisk product has been designed in a modular format, with uniqueseparate insuring clauses for each section. These operateindependently or in combination; modules can be purchased either on acombined or stand-alone basis, depending on an organization’sparticular requirements.

Page 13: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Overview of Cover

1. Professional Services

2. Multimedia Liability

3. Security and Privacy Liability

4. Data Recovery and Loss of Business Income

5. Privacy Regulatory Defence Costs & Penalties

6. Crisis Management Costs, Customer support

7. Data Extortion

Page 14: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Risk Management Services

Page 15: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Risk Management Services

• Vulnerability assessment

• Private arbitration services

• Crisis communications guidelines

• Data breach guidelines

Page 16: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Camargue Commercial Crime

Presented by Justin Keevy

Senior Underwriter

Page 17: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Suspects

• Most common suspects

• Where did all the money go?

• Sentencing

• Recovery

Page 18: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Most Common Losses

• Stock Theft (Manual Invoicing) (Cycle Counting and Collusion)

• EFT Transfers

• Cash Theft

• Debtors (Rolling)

• Payroll (SARS) (Ghost Employees)

• Cheque Fraud

• Cyber Crime (Syndicates)

• Corruption

• Change of Banking Details

• Retail (Credit Cards) (Returns) (Cash)

Page 19: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Let’s Face the Facts

• Estimated loss to an organisation as a result of fraud = 5% of annual revenue

• Estimated that corporate fraud costs SA economy R150Bn annually

• Employees biggest perpetrators (47%) in Africa, average loss due to fraud is R400,000

• From 107 cases analysed in Africa, more than 20% of cases resulted losses of at least US$1m (ZAR 9,68 million)

• +/- 50% of organisations do not recover any losses suffered due to fraud

Page 20: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Overview of cover

Page 21: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

What is covered?

• Theft of the company’s property by employees

• Includes Care, Custody and control

• Money and any other property

• Third party collusion

Page 22: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

What is covered?

• Theft by employees (continued)

• Identifying guilty employees not required

• No restrictions on the method of theft

Page 23: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

What is covered?

• Extortion• Committed by employees or third parties

• Threatened violence to commit theft

• Fraudulent Transfer Instructions• Employees or third parties

Page 24: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

What is covered?

• Computer Fraud

• Hacking

• Use of viruses

• Employees or third parties

Page 25: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

What is covered?

• Contractual Penalties

Contractual liabilities arising out of

• Theft by employees

• Computer Fraud committed by non-employees

Page 26: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Summary of Theft Cover

Type of Theft Employee OthersComputer Hacking/Virus Covered Covered

Fraudulent TransferInstructions Covered Covered

Extortion Covered Covered

Other/Ordinary Theft Covered Not covered

Page 27: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

More about the cover

• Policy covers malicious destruction of data, including• Alteration or destruction of data

• Care, Custody and Control

• Destruction of media

• Computer programs

• Physical records, if damaged as a result of theft

Page 28: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Extensions

• Costs of recovery of uninsured loss

• Reinstatement of office records

• Claims preparation costs

Page 29: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Extensions

• Legal fees

• Automatic Reinstatement

Page 30: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Camargue Commercial Crime Risk Management Services

Page 31: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Whistle Blowing Hotline

Page 32: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Risk Management Hotline

• Risk management hotline

• Fraud risk surveys

Page 33: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

“My employees will never steal from me”

Page 34: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

“My employees will never steal from me”

72% are going to change their mind

Page 35: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Thank you

Questions?

Catherine BerrySenior [email protected]/camargueum

Page 36: An Introduction to Cyber Liability Insurance · The Cyber Risk Phenomenon The incredible pace of technology-based innovation has produced huge dependencies and interconnectivities

Disclaimer

The Camargue Internet team strives to provide you with useful, accurate, and timely information in this presentation. Accordingly, Camargue has attempted to provide accurate information and materials in this presentation but assumes no responsibility for the accuracy and completeness of that information or materials. Camargue may change the content of any information or materials available in this presentation, or to the products described in them, at any time without notice. However, Camargue makes no commitment to update the information or materials in this presentation which, as a result, may be out of date.

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