CIA (e)Bulletin/(e)Bulletin de l'ICA
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November 2016
 
 

Cybercrime and Cyber Risk Insurance: a Necessity for Businesses and Professionals

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By Alexis Tertulliani and Virginie Tremblay

The democratization of information technology and the proliferation of communication networks have contributed to the development of cybercrime in recent years. Cybercrime is an emerging risk which all companies and all professionals face, and for which they should be insured.

According to Wikipedia, cybercrimes are offences that are committed against individuals or groups of individuals with a criminal motive to intentionally harm the reputation of the victim or cause physical or mental harm, or loss, to the victim directly or indirectly, using modern telecommunication networks such as the internet and mobile phones.

The most common offences recorded are the following:

  • Attacks on automated data processing systems;
  • Bank card breaches;
  • Unauthorized or unreported ciphers;
  • Interceptions;
  • Theft of mobile computing equipment;
  • Online scams;
  • Counterfeiting; and
  • Violation of intellectual property.

The number of lawsuits filed following an incident related to cyber risk, especially when it relates to confidential information or nonpublic personal information, is constantly growing, and damages claimed by plaintiffs are increasing at a considerable rate. The reputation and assets of businesses and professionals can be significantly affected by legal action.

It has therefore become essential for businesses and professionals to protect themselves against the consequences of cyber risk. Where legal action is initiated, cyber risk insurance provides coverage against monetary damages and pays for legal defence costs to defend your interests.

Several solutions are available on the insurance market offering protection against network security liability and privacy liability.

Network Security Liability

Protects against an attack involving the following:

  • Denial of service;
  • Transmission of a virus;
  • Breach of electronic security; and
  • Mobile hardware theft, such as a laptop or a smart phone, in order to obtain data illegally.

Privacy Liability

Protects against the following:

  • Theft of nonpublic personal information in electronic and paper format; and
  • Non-compliance of laws related to the protection of privacy and regulations that govern the collection, transmission, and use of such information, as well as access to it.

ProAct professional liability insurance provides broad coverage for the professional activities of actuaries and was specifically designed for the Canadian Institute of Actuaries to protect independent consulting actuaries and actuarial consulting firms. A sound risk management program and comprehensive insurance coverage must evolve to deal with new and developing risks; ProAct now provides coverage for network security liability and privacy liability.

For more information on ProAct, contact Lussier Dale Parizeau: Virginie Tremblay, team leader – professional liability damage insurance broker/registered insurance broker (RIBO).

Alexis Tertulliani is vice-president of risk management and client relations at Lussier Dale Parizeau. Virginie Tremblay is team leader – professional liability damage insurance broker/registered insurance broker (RIBO) also at Lussier Dale Parizeau.

 

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