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Technology Insurance
Loss Scenarios for IT Firms
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A hacker overwhelmed several large Web sites through multiple distributed denial of service (DDOS) attacks. The culprit hijacked various computers throughout the world to bombard targeted servers with seemingly legitimate requests for data. It is estimated that the DDOS attacks, which interrupted the sites´ ability to efficiently conduct their business, caused over $1.2 billion in third-party liability claims and lost business income.
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The losses have been staggering

 

$300 million in 1999, $10 billion in 2000 and already $1.2 billion for what has happened in 2001. Hurricanes? Wild fires? Natural disasters? No. It's the damage that's been done by the Melissa virus, the Love Bug virus, and the recent Code Red worm to computer systems and networks; and it's got insurance agencies, large and small, reassessing their need for security.

The latest Computer Security Institute/FBI crime and security survey reported that 85 percent of respondents (538 computer security practitioners in U.S. corporations, government agencies, financial institutions, medical institutions and universities) detected computer breaches in the last 12 months. Thirty-five percent of respondents quantified their losses for an aggregate total of $375 million. Businesses in the U.S. are at risk of losing billions of dollars due to e-business attacks and accidents, according to research by PricewaterhouseCoopers.

In October 2000, hackers were able to penetrate Microsoft's internal networks in an act of "industrial espionage," or "netspionage," and stole priceless digital blueprints for future products. If it could happen to Microsoft, it could happen to most companies. Intellectual property assets account for 80 cents of every dollar of stock market value of S&P 500 companies, according to PricewaterhouseCoopers. Network Security Insurance is required to cover the potential losses by electronic theft or sabotage.

 

Network Security Insurance and Cyber Terrorism

Cyber terrorism can be conducted with relative ease, low cost, and a minimal amount of sophisticated technology. A computer and a connection to the Internet are all that are needed to wreak havoc from any location in the world.

Code Red, a worm that infected more than 500,000 systems in a matter of a few days in July and August of 2001, infects Web servers, turning them into points from which to launch denial of service attacks.

To protect you from these risks, InsureCast offers Network Security Insurance. Please note that Network Security Insurance should be in addition to anti-virus software, firewalls, backups and other computer security policies - all should be part of your computer network security.

 
 
 

Network Security Insurance

 

What is Network Security Insurance?

Internet Security insurance coverage protects you from losses associated with unauthorized access to or theft of your data or e-business activities, computer viruses, denial of service attacks, as well as alleged unauthorized e-commerce transactions.

The new digital world of network connectivity has served to significantly expand exposures to internal and external dangers. Data/system integrity problems, denial of service losses, and security breaches could all cause you to suffer significant revenue losses as well as represent a catastrophic blow to your organization's reputation. Network insurance is required to cover the potential losses by electronic theft or sabotage.

Network Security Liabilities: Means the actual or alleged incident of any of the following:

  • Transmission of malicious code (i.e. computer virus)
  • Unauthorized access or use
  • Loss of service

Network Security Liability can include either first-party damage ONLY or both first-party damage and third-party damage:

  • First-party damage coverage protects companies against damages and losses sustained in their own computer networks including digital data and lost income.
  • Third-party liability covers damages done to a third party as a result of a company's e-business activity, such as a customer catching a virus on a company Web site or a hacker stealing credit card and confidential customer information from a company's processing center.
 

When do I need Network Security Insurance?

The likelihood of a systems or Internet attack grows each day. Speculation of the impact of cyber-terrorism in recent months has increased everyone's awareness of the vulnerability of our country's infrastructure and the susceptibility of any business to computer attack.

Disgruntled employees or vendors are still the major perpetrators of network sabotage. Few companies have the culture of internal security that can protect it from these internal attacks.

In addition to Network Security Insurance, we recommend any company to have a formal security program in place to protect against hackers, information extortionists, malicious code, and other exposures. Any company that has a computer network should have a hazard risk and vulnerability assessment carried out.

 
 

Why do I need Network Security Insurance?

Traditional policies cannot be relied upon for protection from electronic losses. Property and casualty policies usually cover tangible property.

Many companies are unaware that their current technology and business insurance policies most likely do not cover them for all of their technology-related risks as network security exposures are often excluded on property and casualty policies.

Investors in venture funded companies might require you have to have Network Security Insurance. Many venture capital firms now will not fund a technology-based company unless it has network liability coverage. Likewise, companies that are going public today are facing increased accountability and cannot risk leaving themselves vulnerable to electronic sabotage.

To help protect your company, InsureCast offers Network Security Insurance coverage. Please go to our online CoverageCoach questionnaire to get a free no obligation Network Security Insurance quote.

 
 
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