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from the I-thought-insurance-was-always-a-mess dept.
A recent New York Times article ( http://www.nytimes.com/2014/06/09/business/cyberattack-insurance-a-challenge-for-business.html ) touted cyberinsurance as the "fastest-growing niche in the insurance industry today." Nicole Perlroth and Elizabeth Harris report: "After the breach at Target, its profit was cut nearly in half - down 46 percent over the same period the year before - in large part because the breach scared away its customers." These enormous costs to brand reputation make it difficult for companies to get as much cyber risk coverage as they want, and the demand is only growing. The Times cites statistics showing a 21 percent increase in demand for cyber-insurance policies from 2012 to 2013, with total premiums reaching $1.3 billion last year and individual companies able to acquire a maximum of roughly $300 million in coverage.
At the time of its breach, Target had only $100 million in coverage, with a $10 million deductible, and had been turned away by at least one insurer when it tried to acquire more cyberinsurance, Perlroth and Harris report. They suggest that this coverage may fall well short of the massive losses incurred by the company when it saw its profits nearly halved.
But their piece comes less than a month after Eric Chemi argued exactly the opposite about the impact of Target's security breach in a piece for Bloomberg Businessweek titled "Investors Couldn't Care Less About Data Breaches." He wrote:
Consider Target and its own well-publicized data breach that happened back in December. Target's stock didn't really move at all. Investors sent a clear message they didn't care. The stock fell several weeks later, in January, only after the company cut its earnings forecast. Even so, the stock rebounded in the next six weeks. Target shares have been falling since last year, for a lot of reasons unrelated to the data breach.
There is a good essay on cyber-insurance here.
(Score: 2) by scruffybeard on Wednesday June 18 2014, @07:37PM
I am having trouble swallowing this logic. People frequently buy insurance to insure against their own stupidity. I like to think I am a safe driver, but I still need insurance in case I am at fault, or someone hits me and doesn't have enough insurance to cover the damage. The same applies to contractors who work on your house. They may be the best in the business, but there is still a possibility that things will be overlooked. We are only human, and sh*t happens.
(Score: 2) by tathra on Wednesday June 18 2014, @07:57PM
no, you need insurance on your car because the law requires it. insurance companies are well known for denying all claims by default and not paying a cent until they're sued and ordered by the court to do so. that is why its sad and pathetic, and worse than throwing money away.
(Score: 2) by VLM on Wednesday June 18 2014, @08:40PM
That "mostly" happens when you aggressively optimize to the cheapest most heavily advertised insurers.
I was initially "stuck" because the agent was a family friend with an average insurer, not discount at all, and even after he died thru sheer inertia I stay with them, but whenever something happens they do not play the games I've heard the budget insurers play. I actually get what I paid for, which I've heard never happens with the discount insurers.
One way to put it, is you can pay now, or pay later.
Think about it, the discount CEO demands the same 175 foot yacht as the average CEO or the expensive CEO, and the only tools they have to operate with WRT price is cutting payouts or cutting customer service. So if you wanna pay 5% less in exchange for never getting payouts when you need them and the only customer service being a guy in India who doesn't speak English, I don't see the point in paying 95% of a real insurer for nothing at all.
I've had the same experience with renting. My SIL would always find the cheapest apartment in an area and I'd find the most expensive and I swear that girl spent every minute complaining about bugs and broken appliances and broken windows, whereas I lived in the lap of luxury. She spent years of her life complaining about the stove with only one working burner and the leaky pipes and the leaky ceiling and the broken window while I've got pro landscapers, weekly common area carpet scrubbing, resurfaced driveway every spring, heated underground parking, new appliances... I only paid maybe $200/month more than her, but I loved every minute of renting and she hated every second. Note her salary was higher than mine, I was just spending my money more wisely...
Kinda like buying clothes at walmart. Even now I don't make enough money to buy junk that falls apart instantly, I'm not rich enough to shop at Walmart. Apparently poor people are, or maybe shopping there is why they remain poor. Its very expensive being poor...
(Score: 2) by scruffybeard on Thursday June 19 2014, @12:26PM
Insurance (among many things) is something that almost everyone buys, but rarely take the time to understand what they are getting. Every other year I review my policies with my agent, to make sure I have the coverage I need. Last year we found that I was over insured in one area, and I was able to save a few bucks. Doing a little bit of homework up front can save a lot of aggravation later.
(Score: 2) by urza9814 on Thursday June 19 2014, @05:18PM
Agreed with you until you got to clothes. Or maybe I just have a corollary -- if it's got a designer's name on it, it's gonna be *worse* than the WalMart garbage. Graduated college two years ago and on weekends I'm still wearing the pants I got in *highschool* from JCP. I've got stuff that's ten years old and still looks fine. But all the fancy crap my rich ex got me -- the expensive titanium watch, the "top brand" clothes, the high-end luggage...none of it lasted more than a year. NONE of it. That girl would spend $600 on a freakin *handbag* only to have holes in it three months later!
And actually...my apartment was the cheapest place I could find, and I've got professional landscapers and common areas cleaned weekly, nothing in the apartment has ever broken, parking lots pristine and plentiful, swimming pool and tennis courts and a well maintained gym...though due to work issues I had to find the place and sign my lease from 1000 miles away, so "cheapest I could find" actually means "cheapest advertised on major rental websites" which puts it $100-$200 above the actual cheapest available.
All depends what you want though. My clothes are nothing special, but they last *forever*. Some of the buildings in my apartment complex are over a hundred years old, it's no fancy modern lofts, but it's recently renovated with a great staff and great services. So I say you get what you pay for, but only as long as you first remove the latest popular shiny things from your list of options. If you just buy the most expensive thing possible you're gonna get screwed. Every. Single. Time.
(Score: 1) by bzipitidoo on Thursday June 19 2014, @04:16PM
I find this "sh*t happens" philosophy weak, disingenuous, and dangerous. It's too frequently used to excuse people who do not want to take responsibility for dangers and damages, who have powerful motivation not to as that could cost them money. Just blow it off as bad luck, blame it on God, whatever, as long as the possibility that there's a cause and effect relationship at work, and the cause is human and preventable, gets overlooked or denied. Many things are beyond our control, of course, but that's no reason to let exploiters get away with bull.
As to driving, that is far and away the most dangerous routine activity most of us do. We've done a fair amount to make it safer, beginning with the change of that basic "sh*t happens" attitude towards automobile accidents that used to prevail before Nader's Unsafe at Any Speed book. I mean, in the 1950s, most cars didn't even have seat belts! Now we have seat belts, headrests, airbags, and more. But it's still the most dangerous routine activity.
The insurance industry isn't completely reactive. They created Underwriters Laboratories to test products for safety. They've looked at issues such as the design of road intersections, using their data to identify the ones where the most accidents happened, then recommending changes. Some of these changes were frightfully obvious, like moving a big metal box housing traffic light controls a few feet back so it wouldn't block drivers' views. It shouldn't have taken an insurance company to figure that one out, but we all know how businesses and governments are.
(Score: 2) by scruffybeard on Thursday June 19 2014, @05:05PM
I see what you are saying but there is a balance to strike here. Let's take the GM ignition switch issue as a current example. Here is a case where people knowingly left a bad product out there, that led to the injury or death of many people. Clearly unethical behavior, for which they should be held accountable. But what if GM management did act early? Since as far as I know, this was not intentional, or born of incompetence or negligence, would it be right to say this was preventable? Before this case I am not sure many could have predicted that something as simple as an ignition key could have caused this much trouble.