FM Global. First-Party Property Cyber Coverage

Size: px

Start display at page:

Download "FM Global. First-Party Property Cyber Coverage"

Gavin Goodman
5 years ago
Views:

1 First-Party Property Cyber Coverage

3 Introduction Cyber is Board of Directors level concern #1 issue for commercial insurance industry Everyone on steep learning curve

4 Objective and Agenda Understand differences between first party property cyber and third party cyber coverage - Walk through our findings - Discuss first party property cyber coverage s - Risk manager considerations

5 Cyber Risk Market Research Market maturity curve Current state of cyber insurance market Introductory Growth Maturity Decline

6 Cyber Risk Market Research Insurance purchases highly dependent on industry Industries with large amounts of personal and financial info purchase insurance at higher frequency Lack of confidence in products offered % of companies purchasing cyber insurance

7 Overview What is a cyber attack What is covered What is not covered Coverage differentiators

8 What Is a Cyber Attack Two Broad Categories 1. Introduction of malware (malicious code) a. Virus, spyware, Trojan horses b. Targeted hacking activity 2. Denial-of-Service Attacks

Resulting damage to property other than data on an all-risk basis 2.

9 What Is Covered 1. Physical loss or damage to data a. Destruction, distortion or corruption of data, including from a malware event b. Resulting damage to property other than data on an all-risk basis 2. Time element loss resulting from denial-of-service attacks 3. Property damage and time element loss due to cloud or data services interruption

10 Malware Coverage

11 Loss or Damage to Data Data, Programs or Software coverage Data is covered property Restoration includes research and engineering Temporary costs to defend against a cyber attack Covered anywhere in policy s territory

12 Loss or Damage to Data Insured Location Damage to data Covered Resulting damage to other property Covered Cost to repair, replace or restore the data Covered

13 Loss or Damage to Data Customer or Supplier CTEE Utility - SI Insured Location Service Interruption (SI) loss Covered Third Party Contingent Time Element Extended (CTEE) loss Covered

14 Loss or Damage to Data Insured Location Data Center Damage to data is covered anywhere in Policy territory Covered

15 Loss or Damage to Data When data is damaged by malware 48-hour waiting period/time qualifier Monetary deductible

16 Loss or Damage to Data Loss Example Hacker infiltration over a period of months Wiper malware introduced Data deleted and overwritten Backups destroyed Network down for months

17 Loss or Damage to Data Typical data loss costs Identify and remediate malware Temporary Repairs to prevent further damage Repair of Data, Programs or Software Expedite permanent repair/replacement of DPS

18 Loss or Damage to Data Typical data loss costs Temporarily protect/preserve DPS against immediately impending threat Enhancement of security system and hardware

19 Resulting Damage

20 Resulting Damage Covered under the base form All-risk coverage under the Insuring Agreement Applies to property other than data Not sublimited to Data, Programs or Software limit Example: attacks on industrial control systems

21 Resulting Damage Examples: 2014: German Steel Mill 2010: Iranian Uranium Enrichment Plant (the Stuxnet worm)

22 Resulting Damage The Stuxnet Worm

23 Denial-of-Service Coverage

24 Denial-of-Service Coverage Computer Systems Non-Physical Damage coverage TE loss due to failure of system to operate No physical loss or damage required Temporary costs to defend against a cyber attack Trigger: Malicious act directed at Named Insured Insured s electronic data processing equipment or media

25 Denial-of-Service coverage 48-hour waiting period/time qualifier Monetary deductible

26 Denial-of-Service Attacks Everyday computers infected Synchronized army of attackers Traffic surge at target website

27 Denial-of-Service Attacks HACKER REFLECTOR REFLECTOR REFLECTOR REFLECTOR REFLECTOR REFLECTOR REFLECTOR REFLECTOR TARGET

28 Denial-of-Service Attacks Loss example Severe spike in internet traffic to company websites Overwhelmed network and data center Inaccessible internet services and mobile applications Attack lasted 20 hours

29 Cloud Coverage

Element loss Accidental event trigger Coverage

30 Interruption of Cloud/Data Services Off Premises Data Services coverage Property Damage and Time Element loss Accidental event trigger Coverage applies worldwide Interruption of satellite services included

31 Interruption of Cloud/Data Services 24-hour waiting period/time qualifier Monetary deductible

32 Cyber attack Insured Location Property damage Covered Actual loss sustained and Extra Expense Covered Cloud Provider Coverage applies worldwide, including satellites

33 What s Not Covered

34 What s Not Covered Third-party liability Compromised data/personal information Consumer notification costs Copying and publishing of proprietary data Media liability Cyber extortion expenses

35 How does this coverage dovetail with standalone cyber?

36 If data, programs or software is Property Liability Corrupted Erased Altered/distorted Destroyed Stolen Copied Locked/encrypted where is it covered?

37 Other possible consequences Property Liability Resulting damage Breach expenses Business interruption Damaged reputation Legal damages Regulatory fines

38 Risk Manager Considerations Lots of confusion about cyber risk and coverage Clients don t know what they currently have Everyone wants in Increased client requests for risk assessment help Understand what you currently have Determine what you would like to have Treat like property/casualty Look for the broadest coverage in each area

Francis M. Desousa Operations Vice President Senior Business Development Executive 25050 Country Club Blvd.

39 Francis M. Desousa Operations Vice President Senior Business Development Executive Country Club Blvd. Suite 400 North Olmsted, OH T: C: F: E:

A GUIDE TO CYBER RISKS COVER

A GUIDE TO CYBER RISKS COVER Cyber risk the daily business threat to SMEs Cyber risks and data security breaches are a daily threat to everyday business. Less than 10% of UK companies have cyber insurance