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The surge in cyber attacks against the private sector and critical infrastructure has led to a growth in demand for cyber insurance; yet most insurers are unable properly to assess their clients’ cyber risk, let alone issue the appropriate pricing for their cyber coverage.
Corporate risk managers have noted that insurance against cybercrime is now a necessary budget spending. While many companies have relied on their general commercial liability policies for cyber insurance, they are now seeking stand-alone policies for coverage. When Sony Corporation tried to force its general commercial liability insurance provider to foot the bill for class action lawsuits following a 2011 cyber attack on its PlayStation Network, a New York state court ruled in February 2014 against Sony. Target, in contrast, had $100 million in cyber insurance when forty million payment card numbers were stolen in 2013, according to Business
The Sony ruling prompted some firms to get cyber-specific insurance policies, said Dave Kennedy, CEO of TrustedSec LLC, which helps companies conduct security assessments before they obtain insurance. “There has been a huge uptick in cyber insurance,” he said.
On average, a $1 million cyber coverage could cost $20,000 to $25,000, according to IJ, and German insurance giant Allianz charges 50,000 to 90,000 Euros in annual premiums for 10 to 50 million Euros in coverage.