Emerging Risks: Cyber Liability


Digital privacy is not a terribly new issue, but the frequency of data breaches and the cost of addressing them are rising.


“In that whole digital area I think there’s an explosion of coverages that are coming forth from the surplus lines business.” Dick Bouhan, NAPSLO


The digital explosion in information technology presents risks of hacking, data loss, privacy breaches, and business interruption resulting from a shutdown of IT operations. The surplus lines industry has responded with an explosion of coverages.


Both the frequency and cost of dealing with data breaches are rising. A recent study found that 68% of companies have had at least one incident in which their systems were hacked or important technology and information were lost or misplaced. At the same time, the average cost to address a privacy breach is about $7 million. Yet, many clients don’t address the exposure or buy coverage to protect against it.


Copyright © 2012 by A.M. Best Company, Inc. All rights reserved. No part of this report may be reproduced, stored in a retrieval system or transmitted in any form or by any means; electronic, mechanical, photocopying, recording or otherwise.


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