What are the differences between cyber risk insurance needs in Denmark and the US?

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What are the differences between cyber risk insurance needs in Denmark and the US?

  • business disruption, claims, class action, cyber risk, extortion, insurance, penalties, personal information, risk

Good advice from Niklas Theter, Profit Center Manager, Financial Lines, AIG Denmark

Cyber Insurance – US perspective

Niklas points out how cyber risk in Denmark and Europe is mainly focused on business disruption and extortion, whereas in the US there is a much higher concern about personal information loss from clients and employees.  This issue in the US is the source of huge fines and penalties, class actions and notification costs, so Danish companies need to be aware of this. See his short video here.

Niklas also talks about how important it is that you have access to a real crisis management team 24/7, including people with IT Forensics and Legal Services skills.

He gives some scary statistics about  the growth of cyber claims in the US:

Frequency: Claim volume (US)

  • 2011 to 2014 volume increased 148%
  • 2011 to 2012 volume increased 78%
  • 2012 to 2013 volume increased 43%
  • 2014 YTD versus 2015 YTD increased 33%
  • 2014 – over two breaches pr business day reported to AIG

Severity: Claims Reserves – U.S.

  • Number of $1M+ reserves increased by 225% from 2011 to 2014
  • 2011 to 2012 – no increase
  • 2012 to 2013 increased 50%
  • 2013 to 2014 increased 117%
  • Average cost of defense over $500,000

And illustrates the risk with a recent cyber insurance claim example:

Aalborg Farve og Lak:

  • Russian hackers got into the computer systems of Aalborg Farve og Lak, demanding a ransom to give the company access to their IT systems and vital data (encrypted)
  • They got in via a label printer
  • The police could not help
  • They decided to negotiate, but slow response time and uncertainty of getting back their data dragged the negotiations
  • In the end Aalborg Farve og Lak had DKK 1m in lost income
  • Aalborg Farve og Lak’s 5 suggestions for other companies:
    1. Clearly define what is your responsibility and your cloud service providers’
    2. Get a quote on cyber insurance
    3. Ensure proper backup
    4. Upon large IT invesments, make sure to take references on provider
    5. Do not panic – keep calm and focus on the solution

See more cyber risk case examples and learnings from the presentations given at our September 2015 event here