Although cyber insurance has been around for a few years now, since it is still a fairly new concept and the industry is expected to grow exponentially in the near future, companies may have questions. Lynda A. Bennett, Chair of Insurance Coverage Practice at the law firm of Lowenstein Sandler, LLP, in Roseland, New Jersey, spoke with Securityabout the ins and outs of cyber insurance. As an attorney specializing in these types of claims, Bennett represents enterprises, not insurers.
Cyber insurance can cover one or more areas such as security or privacy breaches, the costs associated with such a breach, the expenses incurred by the interruption of business should a breach occur, any multimedia liability associated with a breach, cyber extortion and expenses related to regulatory compliance, says the National Association of Insurance Commissioners. As of October 2014, only 26 percent of companies had a cyber insurance policy, though that number had increased 150 percent since 2012. In contrast, one Ponemon Institute study showed that cyber crime costs for retail stores in the U.S. more than doubled from 2013 to 2014 and grew considerably in the financial services, technology and communications sectors as well.