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Cyber liability insurance and your security program

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This presentation discusses the current status of Cyber Liability Insurance and how carriers are managing to understand and cover cyber risk. If one views "cyber risk" from a operational risk perspective versus IT risk, then Cyber liability insurance can be one of the most effective countermeasures available to you.

However, buyer beware...as this is a nascent market where underwriters, actuaries, and others involved in providing cyber insurance are on a steep learning curve. Aligning insurance policy language with your security program is paramount...so that when the time comes and you need it most, you'll have a smooth claims process, without litigation with your carrier.

Effectively implementing a cyber insurance policy as another arrow in your quiver, requires collaboration across your organizations.

Published in: Internet
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Cyber liability insurance and your security program

  1. 1. Cyber Liability Insurance and Your Security Program – How They Fit Together SCOTT TAKAOKA SCOTT@VERSPRITE.COM, 415.509.8071 VP BUSINESS DEVELOPMENT
  2. 2. Cyber Insurance Basics o Sold as specialty insurance o General liability, Errors & Omissions policies often do not cover cyber events o Covers costs associated with breach o First party – outside counsel, notification, PR, forensics, credit monitoring, extortion payments o Third party – class action suits, regulatory investigations/fines o Brokers line up multiple carriers to bid on your policy o Security often participates on discovery calls o Multiple carriers may participate in a “risk tower”
  3. 3. Risk Tower Example 1st $10M - Carrier A 2nd $10M – Carrier B 3rd $ 10M - Carrier C 4th $10M - Carrier D 5th $10M - Carrier A $50m in coverage Payout for 1st $10M in loss
  4. 4. Wild, Wild West I N S U R AN C E C AR R I E R S AR E ON A S T E E P L E AR N I N G C U R VE o GL insurance may provide coverage example - “property” o Cyber - non admitted policies o No standard language – caveat emptor! o SMB gets off-the-shelf language o Your policy will change
  5. 5. What’s Behind the Curtain? I N S U R AN C E C AR R I E R S AR E ON A S T E E P L E AR N I N G C U R VE o No actuarial models for cyber risk o Steep learning curve for infosec o Less rigor on application - tight scrutiny on claims o Imperfect information – working through brokers o Broad range in pricing Write policies with basic underwriting Understand claims Write more exclusions Adjust premiums
  6. 6. Interesting Case Law • Columbia Casualty Company (CNA) v. Cottage Health System • Server mis-configuration: anonymous FTP • Exposure of 32,500 records – settled class action suit of $4.1M • Claim initially accepted by CNA • Examined application, then reversed course and sued Cottage • Case dismissed on procedure
  7. 7. Cottage “failed to apply minimum required security practices”…and must “continuously implement” security measures… — CNA Interesting Case Law An unresolved argument
  8. 8. AgendaTake Action • Collaborate across silos - pen-testers to general counsel • Understand context – your threats/attack scenarios and loss potential • PASTA (process for attack simulation and threat analysis) • FAIR (factor analysis for information risk) • Strength of security vs. business impact cyber insurance requirement Legal Business Risk Security
  9. 9. AgendaTake Action • Governance – easiest deficiencies to spot when applying for cyber • Collaborate to review and negotiate policy language - exclusions, BYOD, cloud, vendors risk… • Be careful what you state – you answers are a “warranty” • Be mindful of time limits on notification of breach Legal Business Risk Security
  10. 10. Cyber Liability Insurance and Your Security Program – How They Fit SCOTT TAKAOKA VP BUSINESS DEVELOPMENT

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