Fallout of sorts — and in an unexpected direction — is increasing because of cyber attacks. Legal expert Matthew Karlyn of Foley & Larder LLP told The Wall Street Journal the suit filed against the Donna Seymour, the CIO of the U.S. Office of Personnel Management — and a few unrelated others — are the tip of the iceberg.
“We are absolutely going to see more CIOs taking the fall and ultimately being named in lawsuits,” he said.
That has insurance implications. Not all cyber attack damages for a data breach will be covered by a cyber policy. Agents and brokers need to let their business clients and cyber insured clients know that their D&O coverage needs to be at a proper level.
Seymour is being accused of negligence and the violation of privacy. Her agency — as you remember — saw the theft of the personal data of 21.5 million government employees and contractors. And here’s where the D&O comes into play. Karlyn said she — and other CIOs — are likely to be held responsible for the installation, monitoring and adapting of cyber security measures for their businesses or agencies.
Cyber security does not cover litigation due to negligence and that means potential growth in D&O business for agencies and brokerages.
Ian Cavalier runs claims for Safeonline LLP. He told Insurance Business America, “What we have seen in the market is D&O coverage taking a hit due to breaches; especially in light of large scale hacks at Target, Sony and Adobe which have resulted in lawsuits against both company and directors, which are still ongoing. But there is plenty of scope for growth, particularly as the cyber market is still in relative infancy with regard to premium.”
That’s where agents and brokers come into play. Corporate risk management — in this case — is a must. “As the scope and size of policies and claims increase, personal responsibility is now being called into question and individuals will need to be better educated and receive the full backing of colleagues to implement the necessary initiates to safeguard their data against cyber threats,” Cavalier said.
Source link: Insurance Business America