Insurers are responding to a growing market for identity theft and data security coverage that is being driven by consumers' increased appreciation of the risk, according to a panel of experts.
Their discussion yesterday during a Web seminar sponsored by insurance broker Aon, Chicago, explained that the products are given impetus by both the expanding use of electronic data and an increase in its portability.
Patrick Donnelly, managing director of professional risk solutions for Aon financial services group, said that the loss of consumer data can do greater harm to a company than just financial loss. He said few incidents of computer security systems breaching have lead to the theft of data, but the harm to a company's reputation can be significant.
"A suit does not have to cost a lot to be costly to a company," he said.
When a company is hit with a suit or accusations of a personal data security breach, it must be dealt with and settled quickly, he said.
While these incidents have not resulted in expensive jury awards, negligence lawyers are growing in sophistication as they continue to address these cases, and companies can expect to be held financially accountable for events that caused emotional distress, said Mr. Donnelly.
"It is important that we keep an eye on these things," said Mr. Donnelly. "There are changes taking place in the landscape."
Troy Smith, managing director for Aon Consulting's information security and IT consulting practice, noted that one of the biggest problems with businesses is their misconception that they are not susceptible to technology security breaches.
There have been dozens of incidents where breaches occurred because of the loss or theft of computers. Making matters worse, the companies or government agencies failed to encrypt the information, meaning that "millions of personal private citizens' information was compromised."
Scott Kannry, senior member of professional risk solutions for Aon financial services group, noted that when it comes to insurance coverage, clients need to look into tying their information technology exposures to their errors and omissions coverage. They also need to consider if they are comfortable with the retention rates their coverage offers.
There are more offerings in the marketplace for information technology breeches tied to errors and omission coverage than in the past, and pricing is beginning to moderate, he observed. Underwriting is also becoming easier with expanded coverage and limits.
The Web seminar is online at www.aon.com/us/about/events/web_seminar.jsp
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