Cyber liability still a tough sell despite hacking headlines

In spite of headlines of hackers stealing and exposing personal information from major retailers and social media companies, it remains an uphill battle to convince business owners to take advantage of cyber risk liability coverage, says one broker.

Risk Management News

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In spite of headlines of hackers stealing and exposing personal information from major retailers and social media companies, it remains an uphill battle to convince business owners to take advantage of cyber risk liability coverage, says one broker.

“It is something that they need. Do I seem more businesses taking it? No,” says Scott Sleightholm, commercial account executive at Smith Petrie Carr & Scott Insurance Brokers in Ottawa, Ont. “A lot of businesses are still, ‘I don’t need that, we have certain protocols;’ or ‘that will never happen to me.’ Cyber liability is a big, big concern from a brokers’ standpoint. It is a huge exposure, and we’re trying to upsell it.”

It was only last week that about 4.6 million users of Snapchat, a rising social media company, had their names and phone numbers posted online after one attack.

The news of the attacks came just two weeks after retail giant Target disclosed that hackers had made off with the credit and debit card information of 40 million U.S. customers.

It is news that needs to be driven home to the consumer through the media, says Sleightholm, as brokers can use the headlines to convince commercial clients of the need to buy cyber risk coverage.

“The more we see of it in the media, we can use those as examples and that will help our pitch down the road,” he told Insurance Business. “It is a big concern, and businesses are still not picking up on it. All the producers in our firm, all the partners in our firm, we’ve gone to all of our clients and we try to tell them about it until we are blue in the face – if you are a business of one or two people or a business of 50 to hundred people, you have this exposure.” (continued.)

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Snapchat, which is used to create messages and content that disappear after being viewed, is the latest darling of Silicon Valley, having reportedly turned down a $3 billion buyout offer from Facebook.

The attack on Snapchat apparently occurred about a week after security analysts had warned the social networking company about vulnerabilities in how it safeguards user data. Hackers posted the entire database of user information on a website, SnapchatDB.info, and made it available for download.

According to the website Techcrunch, the attack reports that the hackers behind the Snapchat attack told it: “Our motivation behind the release was to raise the public awareness around the issue,” hackers apparently told the website Techcrunch and also put public pressure on Snapchat to get this exploit fixed.”

In the case of Target Corp., it advised customers to check their statements carefully, and asked that those who suspected unauthorized activity on their cards to report it to the credit card companies or to call Target.

Target didn’t say exactly how the data breach occurred – which was limited to U.S. customers only – but said it had since fixed the problem and that credit card holders can continue shopping at its stores.

Target has 1,797 U.S. stores and 124 in Canada. (continued.)

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News of the breach came at the height of the holiday shopping season, and may have scared away shoppers worried about the safety of their personal data.

Target is just the latest retailer to be hit with a data breach problem. TJX Cos., which runs stores such as T.J. Maxx and Marshall’s, had a breach that began in July 2005 that exposed at least 45.7 million credit and debit cards to possible fraud. That breach wasn’t detected until December 2006.

In June 2009, TJX agreed to pay $9.75 million in a settlement with multiple states related to the massive data theft but stressed at the time that it firmly believed it did not violate any consumer protection or data security laws.

An even larger hack hit Sony in 2011. It had to rebuild trust among PlayStation Network gamers after hackers compromised personal information – including credit card data – on more than 100 million user accounts.

Sony was criticized for slowness in alerting users to the breach.
 

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