AIG Says Companies Massively Under-Insured for Cyber Risk

[Audrey McNeil <audrey () riskbasedsecurity com>]

http://www.bloomberg.com/news/2013-12-17/aig-says-companies-massively-under-insured-for-cyber-risk.html

Peter Hancock, the chief executive officer of American International Group
Inc. (AIG)’s property-casualty unit, says businesses have too little
coverage to guard against costs tied to cyber attacks and data breaches.

“It’s a very real risk, and one that’s massively under-insured,” Hancock,
55, said today at a conference in New York held by National Underwriter.
“Without greater awareness, there’s not much customer demand. Without much
customer demand, the industry’s capacity is rather small. And without the
large capacity, the customers say, ‘Why buy it?’”

Zurich Insurance Group AG (ZURN) and New York-based AIG are among carriers
offering protection that helps pay for damage caused by hacking as well as
fines and repair costs. Attacks against U.S. banks have knocked their
websites offline and prevented customer access, and the Associated Press’s
Twitter account was hacked this year to falsely report an explosion near
the White House, temporarily triggering a plunge in U.S. stocks.

Michael Kerner, who oversees property-casualty coverage at Zurich,
Switzerland’s largest insurer, said last month that computer threats are
escalating and may soon cause “dramatic” disruptions for businesses and
individuals. The AP attack was carried out by the Syrian Electronic Army, a
group that supports the government of President Bashar al-Assad.

Businesses contend with a variety of state privacy laws that outline how
they must respond when customer data is compromised, Hancock said.

“It’s really important for companies to be aware of their obligations when
there’s a breach,” he said. “A lot of companies we encounter have
absolutely no clue. They know they’ve been breached but they don’t know
what the right response is.”

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