Computer crime or computer security breaches cost American businesses as much as $150 million in lost revenue each year. This includes theft of information, sabotage of data or networks, system penetration by outsiders, abuse of internet access, spoofing, viruses, financial fraud, active eavesdropping, unauthorized access from the inside and theft of laptops, etc. These hackers can be amateurs who are simply motivated by challenge to crack a system, professional outsiders who hack to illegally obtain company information or an employee hacker. Despite firewalls, computer security is insufficient against hackers.
Why hack insurance is necessary:
Due to increased hacking activity and poor security, companies are experiencing major financial and network damage. It becomes very important to get an insurance policy that specifically covers damage from hackers or protects e-commerce business.
Disadvantages of existing insurance plans:
Traditional insurance policies are inadequate for most aspects of computer-related crime damage. Their coverage is based on physical assets, not information assets. They can rarely define cyber risk coverage and even if they do, the security breach is ruled out. Intellectual property infringement, content and advertising crimes over the Internet, employee dishonesty and computer fraud are all ‘Greek’ terms for traditional insurance companies. They do not recognize any financial loss, reduction or closure of businesses due to computer crime by hackers.
Benefits of hack insurance:
Most insurance companies have come to an agreement about the impact of technology on business in the current circumstances. They have become more sensitive to the risks of online or e-commerce companies and cover them adequately.
Since 2000, some companies, such as Lloyd’s of London, Zurich Insurance Group and Chubb Insurance Group, have begun to cover computer security breaches. The American International Group’s NetAdvantage program targets a wide range of e-commerce crimes, such as cyber extortion, content defamation, copyright and trademark infringement, viruses, theft, destruction or alteration of data. They offer rewards for arresting hackers and compensation for crisis management after hacking. Many specialist insurers have come to the fore 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 main advantages are that some criminal behind the keyboard cannot destroy your business. Information gives companies a competitive advantage in the global economy. It can be disastrous for the company if the information is destroyed or stolen or if a virus is infected or disclosed to competitors. Many insurers have started offering insurance products to protect the business against network breaches or virus attacks.
Chubb Corporation’s “Cyber Security Policy” provides comprehensive coverage against e-theft, fraudulent e-communications, e-vandalism, e-threats, and e-services compromise. Many cyber insurers are addressing difficult issues such as information asymmetry, adverse selection and moral hazard and other areas of risk to provide more comprehensive solutions and coverage.
Cyber insurance is a powerful weapon to improve internet security. Cyber insurance products, now offered by insurance companies, meet the needs of e-business today.
Hacker insurance for e-commerce business
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