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INSURERS CUT CYBER CAPACITY FOR RETAILERS. TARGET BREACH TRIGGERS UNDERWRITING REVIEWS. (Insurance Daily abstract)
Judy Greenwald. Business Insurance
03/31/2014

 

Page 1. Insurers are reacting to the Target data theft and other recent data breaches by cutting back on cyber capacity for retailers and taking a closer look at the risk as demand for cyber coverage rises. Prior to the breach businesses could purchase between $300 million and $350 million in cyber risk insurance capacity. Following the breach capacity has fallen to $250 million, including up to $25 million in primary coverage. Businesses also face higher retentions and premiums. Insurers vary in how much capacity they will offer to build a coverage tower. Tom Reagan of Beazley PLC, a large capacity underwriter, said the company offers $25 million in capacity per policy and that they are “fully committed” to underwriting cyber coverage even though breaches are inevitable. Other insurers are pulling back. According to Christopher Keegan of Willis North, “it’s hard to get more than $10 million from more than one market”. The article quotes other cyber insurance experts giving their take on the current market. A sidebar article discusses details of the Target breach. The company’s SEC filing revealed that Target has $100 million in “network-security” insurance and has generated $44 million in reimbursable costs as of February 1st. The first $10 million of coverage is self-insured. Ace Ltd., Axis Capital Holdings Ltd. and AIG provide additional layers of coverage. Over 80 lawsuits have been filed against Target in connection to the breach, including a class action filed in federal court in Chicago alleging that Target had known since 2007 that its security policies were inadequate. (Database Highlight, Doc. No. 2014040409)

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