To address the growing concern around threats now associated with Web 2.0, Hartford Financial Products, an underwriting unit of The Hartford Financial Services Group Inc., has announced a new liability product, CyberChoice 2.0.

Web 2.0, while it has many definitions, is a broad term describing the next phase of Internet development, including technologies such as blogs and other forms of online interaction.

According to Hartford-based HFP, the new product "provides businesses with a robust, technology-related insurance policy that goes beyond traditional business insurance."

Information sharing among Internet users via Web-based communities such as social-networking sites has become a real liability threat for many organizations, businesses and universities, said HFP.

"We saw that in the marketplace of business risk, the traditional business insurance policies were no longer sufficient because they did not grant coverage or were too vague," said Drew Bartkiewicz, vice president of Cyber and New Media Risk at The Hartford. "In other words, business insurance has not kept up with the risks of emerging technology-related exposures, which now can negatively impact businesses, large and small."

CyberChoice 2.0 includes both errors and omissions and first-party coverage designed to help meet the needs of companies that recognize their technology exposure and information risks, the company said.

Organizations with personally identifiable information include: health care, financial services, retail, manufacturing, education, legal and media. In addition, miscellaneous companies such as data processors, application service providers and e-commerce companies may have an increased cyber exposure.

Such coverage is needed, Mr. Bartkiewicz noted, because new laws for data privacy compliance have "mushroomed" with "an increase in the number of data privacy incidents and indications that this area of business risk will get worse [for companies] before it gets better."

"Cyber risk is an unavoidable, but very real, part of the Internet economy that has created new liabilities and business exposures," said Mr. Bartkiewicz.

"As Web 2.0 is becoming more mainstream, so are the business risks of privacy, media and online advertising. This is especially an issue as companies experiment with initiatives where the users create the potential new media liabilities associated with Web sites, including social networking sites. This is the most dynamic area of the economy, and the most legally uncertain in terms of doing business."

The Hartford said key features of CyberChoice 2.0 include:

o Third-party coverage for data privacy and network security liability; Internet and electronic media liability; and professional services liability.

o First-party business interruption coverage in the event of a network security breach.

o First-party cyber extortion coverage for threats against data and identity theft.

o Intellectual property coverage for advertising and technology products.

o Reimbursement for expenses related to responding to a major privacy event.

Some examples include notification of affected parties, costs for managing the crisis, data privacy regulatory fines, cost associated with credit monitoring, and investigation of the event by outside experts.

Up to $10 million in coverage limits are available.

According to Mr. Bartkiewicz, specific threats addressed by this coverage include: organized hackers, targeted virus attacks, data theft of personally identifiable information, network interruption causing either a liability or a first-party business interruption or loss of revenue. Also covered are risks associated with user-created content and data on companies that deploy Web 2.0 technologies in their company Web sites.

"In the last decade alone, personal data has become a valued company asset for businesses in the United States and abroad," he said. "With companies doubling their data volume every year and new regulations on the horizon, experts predict the problem of data risk will continue to threaten businesses--and that the likelihood that a company or organization will experience a data breach will increase exponentially."

According to Mr. Bartkiewicz, the product has elicited "exceptionally high" early interest from brokers that place this coverage. Many chief information offices, chief financial officers and chief marketing officers "now recognize that technology alone is no longer sufficient as a solution to cyber risk and liability," he observed.

"Cyber risk will continue to rapidly take form and evolve into new shapes as the business world continues to see the intersection of law, risk and technology innovation."

Asked about agents' reactions, he said, "Some agents/clients recognize the risks. Some are anxious to learn, which is why we see education of agents and customers as one of our primary goals for this rapidly emerging line of business."

"The result of all this is simple," he stated. "Business insurance will never be the same again thanks to the new frontiers of the Internet, software automation and digitally dependent business culture. We are just scratching the surface."

CyberChoice 2.0 is available via The Hartford Financial Products unit.

Further information is available at www.hfpinsurance.com.

Special Reports /

Hartford Debuts Cyber Liability Product

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