1. Cyber Trends and Market Update
Joey Sylvester, Gallagher | Sept 19, 2018

2. Agenda September 19, 2018 Cyber Overview Breach Trends Industry Trends
Market Conditions

4. Common Results of a Cyber Attack
Spread of Malicious Code / Denial of Service Attacks
Unauthorized Access to PII, PHI, Corporate Confidential Info.
Cyber Extortion
Data Recovery
Bodily Injury & Property Damage
Network Business Interruption
Loss of Money
(funds transfer – phishing )
Cyber Attack

5. Traditional Cyber Insurance
Exposure Category
Description
Network Security Liability
Provides liability coverage if an Insured's Computer System fails to prevent a Security Breach or a Privacy Breach
Privacy Liability
Provides liability coverage if an Insured fails to protect electronic or non-electronic information in their care custody and control
Regulatory Liability
Coverage for lawsuits or investigations by Federal, State, or Foreign regulators relating to Privacy Laws
PCI Assessments
Coverage for contractual assessments, fines and penalties owed under the terms of a Merchant Services Agreement due to non-compliance with the Payment Card Industry Data Security Standard (PCI-DSS) and as the result of a data breach
Breach Response
Legal Expenses
1st Party legal expenses to review and determine responsibilities under Privacy Breach Law
Forensic Investigations
1st Party expenses to investigate a system intrusion into an Insured Computer System
Notification Expense
1st Party expenses to comply with Privacy Law notification requirements
Credit /ID Monitoring
1st Party expenses to provide up to 12 months credit monitoring
Public Relations
1st Party expenses to hire a Public Relations firm
Media Liability
Covers the Insured for Intellectual Property and Personal Injury perils that result from dissemination of content (coverage for Patent and Trade Secrets are generally not provided)
Cyber Extortion
Payments made to a party threatening to attack an Insured's Computer System in order to avert a cyber attack
Data Recovery
1st party expenses to recover data damaged on an Insured Computer System as a result of a Failure of Security
Business Interruption
1st party expenses for lost income from an interruption to an Insured Computer System as a result of a Failure of Security

6. Cyber Liability Breach Trends
3,833 breaches last January thru September, that’s up 18.2% from the year before

7. Cyber Liability Breach Trends
Over 7 Billion records exposed in 9 months last year, that’s up 305% from the year before.

8. Cyber Liability
Data Types

9. Cyber Liability Eye Opening Events WannaCry NotPetya
Worldwide ransomware attack
Estimated $4 Billion in losses worldwide
NotPetya
Ransomware
Publicized network interruption losses of up to $300M (for one organization!)

10. Company Description Data of Event Impact
Largest Data Breaches Since 2010
Company Description
Data of Event
Impact
Global internet services provider
3 billion user accounts
Social media website
October 2016
More than million accounts
Global e-commerce website
May 2014
145 million users compromised
Credit & Data Information/BPO
July 2017
143 million consumers
Brick & Mortar Retailer / On-line Retailer
December 2013
Up to 110 million people compromised
Video gaming network
April 2011
77 million network accounts
Global financial institution
July 2014
76 million households and 7 million small businesses
An agency of the United States of America
22 million current and former federal employees

11. Cyber Liability
How does it happen?

15. Cyber Liability New Regulations General Data Protection Regulation
20 Million or 4% of global revenue
California Consumer Privacy Act
$100 to $750 due to each California citizen whose data has been breached
NYDFS
Updates to Louisiana law…

16. Cyber Insurance Market Outlook
Small & Middle Market Business (SMBs)
Businesses with annual sales/operating budgets of less than $1 billion or unique record counts of less than 2 million
Extremely competitive market
Anticipated that GL and Property carriers will add enhanced cyber provisions to their policies for some

17. Cyber Insurance Market Outlook
Risk Management Business
Organizations with more than $1 Billion in sales/operating budget or over 2 million in unique record counts
Higher frequency of attacks
Fewer carrier options
Insureds with a demonstrably strong cyber risk management program see more favorable offerings

18. Cyber Insurance Market Outlook
Coverage, Limits and Retentions
More emphasis on network business interruption, dependent business interruption, system failure risk
Coverage grants may continue as sublimits:
Dependent business interruption and system failure
Reputational harm
Telephone fraud
Social engineering fraud

19. Cyber Insurance Market Outlook
Premium Rates
SMBs – stable or decrease up to 5%
Risk Management Business – stable, but could decrease up to 5% depending on controls/retentions
High Risk - flat to 5% increase
Organizations with negative breach experience, increase in excess of 5%

20. Cyber Insurance Discussion
Coverage Coordination
Mitigation costs addressing unauthorized disclosures
Cyber, other
Liability from unauthorized disclosure
Cyber, E&O, GL, other
Cyber extortion (ransomware)
Cyber, K&R, both
Network business interruption
Property, Cyber, both
Data recovery

21. Cyber Insurance Discussion
Coverage Coordination
Theft of funds
Crime, Cyber, both, Bonds?
Theft of telephone services
Crime, Cyber, both
Third party bodily injury/property damage
GL (silent language vs. affirmative language)
Cyber (limited markets)
First party property damage
Property (silent language vs. affirmative language)
Important to note, for financial institution, loss of funds will not be covered by Cyber, that’s for the financial institution bond.

22. Questions?

23. 111 Veterans Blvd. Suite 1130 Metairie, LA 70005 USA
Thank you!
Joey Sylvester
111 Veterans Blvd. Suite 1130
Metairie, LA 70005
USA