Hacker Insurance For E-Commerce Business

Computer crimes or computer security breaches cost American companies a whopping $150 millions in lost revenues every year. This includes theft of information, sabotage of data or networks, system penetration by outsiders, abuse of internet access, spoofing, viruses, financial fraud, active wiretapping, unauthorized insider access and theft of laptops, etc. These hackers could be amateurs simply motivated by challenge to crack a system, professional outsiders hacking to gain company information illicitly or an employee hacker. Despite firewalls, computer security is inadequate against hackers.

Why Hacking Insurance is Necessary:

Due to increased hacking activity and flawed security, companies incur high financial and network damages. It becomes very important to take insurance policy specifically covering damages against hackers or protecting e-commerce business.

Drawbacks of Existing Insurance Plans:

Traditional insurance policies are inadequate against most aspects of crime damages due to computers. Their coverage is based on physical assets, not information assets. They rarely can define cyber risk coverage and even if they do, the breach in security is excluded. Intellectual property infringement, content and advertising offences over the Internet, employee dishonesty and computer fraud are all ‘Greek’ terms for traditional insurance companies. They do not recognize business monetary loss, reduction or shut down due to computer crimes by hackers.

Advantages of Hacking Insurance:

Most insurance companies have come to terms to recognize the impact of technology on business in present circumstances. They have become more sensitive to online or e-commerce businesses risks and cover them adequately.

Since 2000, a few companies like Lloyd’s of London, Zurich Insurance Group and Chubb Insurance Group are beginning to cover the computer security breaches. American International Group’s NetAdvantage Program addresses a host of e-commerce crimes like cyber extortion, content defamation, copyright and trademark infringement, viruses, theft, destruction or alteration of data. They offer rewards for apprehending hackers and reimburse for post hacking crisis management. Many specialty insurers have come to the forefront to offer e-commerce protection packages. INSUREtrust.com, Hamilton, Ace Ltd’s information technology products, Okemos, Website Insurance& Security Program are some of the recent entrants in this field.

The chief advantages are that some criminal behind the keyboard cannot destroy your business. Information gives companies a competitive edge in global economy. It can be disastrous for the company, if the information is destroyed or stolen or virus infected or divulged to competitors. Many insurers have started offering insurance products to protect company from network breaches or virus attacks.

Chubb Corporation’s ‘cyber-security’ policy provides comprehensive coverage against e-theft, fraudulent e-communication, e-vandalism, e-threat and impairment of e-services. Many cyber insurers are addressing the tough issues like asymmetric information, adverse selection and moral hazards and other risk domains to provide more comprehensive solutions and coverage.

Cyber insurance is a potent weapon for improving Internet security. Cyber insurance products, now being offered by insurance firms, address the needs of e-businesses today.

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