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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: 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.