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Complacency Not An Option
Higher levels of awareness and better security software, as well as proactive practices like encryption, firewalls and frequent password changes may have prevented a drastic rise in cyber attacks, but have not driven them down. A 2013 poll of 500 U.S. executives, and security experts by cybersecurity firm PWC found that the largest number of respondents, 42 percent, said the number of events faced by their organization remained the same last year, compared to 24 percent who saw an increase. Just four percent, however, saw a decline of more than 15 percent.
Conventional insurance policies won’t cover all the legal and technology costs of a data breach, which is why companies increasingly look to a growing line of products to cover damage caused by hidden vulnerabilities like Heartbleed, malicious software, Trojan horses or international hackers who steal information for fun and profit.
In much the same way drivers with spotless records still need car insurance, companies that do their due diligence and invest in up-to-date systems and well-trained personnel still also need to plan for the worst. All it takes is one careless or malicious employee, or one less-diligent electronic partner, to compromise a system.
In the meantime, increasingly stringent European data security laws are drastically impacting the way U.S. companies do business in the E.U. and increasing the chances they could face litigation. In response, experienced international insurance brokers who prepare U.S. companies for the risks they face overseas are fielding an increasing requests for information and coverage.
Coverage Gaps and Legal Expenses
Policies from international insurers like Clements Worldwide are crafted based on where a U.S.-based company operates, to ensure that there are no gaps in coverage in other countries. Although policies are structured based on a company’s individual needs, some common policy add-ons include:
- First-party costs incurred in response to a data breach
- Claims expenses and damages for third-party liability claims
- Civil or regulatory fines or penalties
- Payment Card Industry (PCI) fines/penalties
- Shared or stand-alone limits
- Voluntary notification
- Contractual liability and indemnity
- Expert breach response assistance, with 24/7 access to a law firm and team of breach response service providers.
Since most hacks originate in Europe and Asia, particularly the Russian Federation, Taiwan and Germany, Clements, for example, specializes in products that transcend borders and protect clients in all jurisdictions. (continued...)