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Hacking hysteria invigorates insurance industry

And security firms are supportive -- shocker

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Internet Security Threat Report 2014

The dividends of this month's DDoS attacks against high-profile sites Yahoo, eBay, Amazon and others just keep multiplying. Now it seems the insurance industry is going to hand the security industry a tidy windfall. Hewlett-Packard last week began offering reduced-rate hacker insurance. Meanwhile, online security outfit Network Associates is now enthusiastically recommending such insurance, Reuters reports. And we can see why they would. Surely a policy is going to require routine security audits, providing heaps of lucrative contracts for security firms. Garrett Koehm, an executive vice president for Tri-City Brokerage, says losses to hack attacks are not always covered in a company's primary insurance package, and that Internet businesses are taking a closer look at what their existing coverage includes. Tri-City, which offers coverage through Lloyds of London, also advises Internet companies to protect themselves against corporate espionage and sabotage to their systems by disgruntled employees. "I'd say activity is up four or fivefold this month," Phil Hart, vice president of technology underwriting at American International Group, reckons. In January AIG began offering insurance for losses of up to $25 million resulting from hacking incidents, but initially got a lukewarm response. Now things are looking up thanks to the DDoS media frenzy. We're just surprised it's taken this long for the high-tech insurance and security industries to start scratching each other's backs. Surely, this could be the start of a beautiful friendship. ®

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