1. Cyber Risk Insurance

2. Some Statistics Privacy Rights Clearinghouse o From 2005 – February 19, 2013 = 607,118,029 records reported breached. Ponemon Institute o The 2011 Cost of Data Breach Study, the average per capita cost of data breach was $194 per record. 2012 Data Breach Investigations Report by Verizon RISK Team o 98% of data breaches caused by external agents (a majority by criminal factions) o Most data breaches discovered by third parties could have been prevented without employing difficult or expensive measures Gartner Group o 1 laptop stolen every 53 seconds in the U.S.

3. Cyber Risk Exposures Third Party Exposures o Infringement of copyright, trade mark, trade dress, etc. o Defamation o Invasion Of Privacy Rights o Release Or Disclosure Of Personal Information o Transmission Of Computer Virus

4. Cyber Risk Exposures First Party Exposures o Virus/Denial Of Service o Business Income/Extra Expense o Damage Or Destruction Of Electronic Data o Reputational Damage o Data Breach o Cyber Extortion

5. Potential Gaps In Traditional Coverage Bullet one o Sub bullet one General LiabilityProperty Errors & OmissionsCrimeCyber Data Security Breach Possible Coverage Generally Unlikely Coverage Generally Likely Virus/Hack Possible Coverage Generally Likely Denial Of Service Attack Coverage Generally Unlikely Possible Coverage Generally Unlikely Possible Coverage Generally Likely Extortion Threat Coverage Generally Unlikely Possible Coverage Generally Likely Regulatory Defense Coverage Generally Unlikely Possible Coverage Generally Unlikely Coverage Generally Likely Business Interruption Coverage Generally Unlikely Possible Coverage Generally Unlikely Coverage Generally Likely Breach Notification Coverage Generally Unlikely Possible Coverage Generally Unlikely Coverage Generally Likely

6. Cyber Policies Stand alone policies (i.e. not part of a package) o Starting to see “roll-on” coverages in other products, including BOP, D&O other professional liability products Combination of first and third-party coverages Claims-made Defense within limits Retroactive dates Aggregate limits

7. Cyber Policies Common Coverages: o Web Site Content Liability o Security Breach Liability (incl. regulatory defense) o Programming Errors and Omissions Liability o Replacement or Restoration of Electronic Data o Extortion Threats o Business Income and Extra Expense o Public Relations Expense o Security Breach Expense (remediation)

8. Cyber Policies Other Coverages: o Regulatory Fines and Penalties o Media o (Tech E&O) o Rogue Employee o Telephone Toll Fraud o Computer and Funds Transfer Fraud

9. Cyber Policies Typical policy limits $2.5 - $10 million Larger placements $25+ million SIR’s Premium drivers may include: o Type of industry – risk classification o Type of content published o Type of personal information collected o Number of records stored o IT security protocols

10. Thank You Robert Olausen Manager, Specialty Commercial Lines ISO – Insurance Programs and Analytic Services 545 Washington Boulevard Jersey City, NJ 07310 201-469-2817 rolausen@iso.com No part of this presentation may be copied or redistributed without the prior written consent of ISO. This material was used exclusively as an exhibit to an oral presentation. It may not be, nor should it be relied upon as reflecting, a complete record of the discussion.