Study: Many Lack Insurance For Cyber Risks

In a survey of 225 U.S. companies, the researchers found that 90 percent of the participants are concerned about computer-related incidents affecting their operations. Some 65 percent said they are worried about virus attacks, while nearly 40 percent said they are concerned about breaches to network security and 30 percent voiced concerns about Web site security.

"The awareness has increased over time–this is the second survey we conducted in the past couple of years. More and more people seem to be aware of their potential exposures," said Toby Levy, industry program manager at The Hartford.

One common misconception that some companies still have, though, is that if they are not conducting e-commerce, they don't have to worry about the cyber-risk issue. "But all companies are dependent on technology and the Internet to some extent and they have exposures they should consider," Mr. Levy told National Underwriter.

Just in the past couple of years, there have been a number of disruptive viruses unleashed into corporate systems, and some of these viruses, such as the "I Love You" virus, "Code Red" and "Melissa," were so pervasive it raised the awareness of cyber risks. "Companies got a glimpse of what could happen," Mr. Levy said.

But the survey found that even those businesses that have their own Web sites, which could significantly increase their cyber risks, the majority still do not have Internet-related insurance.

The survey found that two-thirds of participants have their own Web sites, but less than half of them are even aware that there is insurance to cover Internet-related exposures. And even among those who are aware, almost 70 percent didn't carry such insurance.

Julia Feldman, technology coverage expert with The Hartford, said that any company that uses e-mail is vulnerable to virus attacks, which can interrupt business for days or even weeks. "Unfortunately, many business owners mistakenly believe if they don't have a Web site, they don't need to think about Internet-related exposures," Ms. Feldman said.

Furthermore, there are other Internet-relates risks that companies should also keep in mind. For example, a small service company with an informational Web site may not be aware that posting articles written by outside sources can create liability exposures related to copyright infringement, Ms. Feldman advised.

Also, collecting credit card information through a company's Web site can create liability exposures related to customer privacy, she added, so it's important to have the proper firewalls and security software in place.

And small- and mid-sized companies that want insurance for cyber risks will have to do their homework to find appropriate coverage. "Most of the products that are out there are designed toward Fortune 500 companies or E-bays of the world that are 100 percent dependent on the Internet," Mr. Levy noted.