Subject: [NEXTEL-1] Cyberattacks Boost Market for Hacker Insurance

From: Marcel <[email-masked]>
Date: Wed, 29 Jan 2003 17:33:34 -0500

Cyberattacks Boost Market for Hacker Insurance

The insurance industry projects that the market for network risk insurance will
grow from $100 million to $2.5 billion by 2005. To qualify, insurers usually require
a third party assessment of a company's network security, evidence that its
board has taken reasonable steps to protect the network, and can also require
that companies install surveillance and intrusion detection software. Even if those
steps are taken, the insurance can still exclude more incidents than it covers,
and can cost from a few thousand dollars to $1 million per unit of coverage.

Hacker Insurance Market Boosted by Cyberattacks
Mon Jan 27,10:05 PM ET

By Gina Keating

LOS ANGELES (Reuters) - The computer worm that clogged Internet
traffic and shut down vulnerable corporate networks this weekend also
provided another boost to the emerging market for hacker insurance, experts
said on Monday.

Hacker insurance, also known as "network risk
insurance," has been on the market for about
three years, but is expected to explode from a
$100 million sideshow into a $2.5 billion
behemoth by 2005, according to insurance
industry projections.

This weekend's Internet attack, which virtually
cut off Internet access in South Korea (news -
web sites) and toppled other networks
worldwide, underlined the impossibility of total
computer security, said Counterpane Internet
Security Chief Technology Officer Bruce Schneier.

"I believe that within a few years hacking insurance will be ubiquitous,"
Schneier said. "The notion that you must rely on prevention is just as stupid
as building a brick wall around your house. That notion is just wrong."

While investigators continued to probe the identity of the culprit behind the
"SQL Slammer" worm, companies were tallying the economic cost of the
attack, which continues to grow as businesses become more dependent on
Internet infrastructure to conduct their business.

At the same time, some security experts questioned whether insurance
policies would be effective, given that many of them exclude more incidents
than they cover, given the unpredictability of where and how an attack could
come.

Still, the hacker insurance field got a big boost on Jan. 1, when many
existing commercial general liability policies expired and were replaced by
policies that contain explicit exclusions for hacker-related losses, attorney
Robert Steinberg of Latham & Watkins in Los Angeles told clients in a
recent brief.

"Particularly given the post-Sept. 11 climate, fears about how such
vulnerabilities and attendant magnitudes of loss might impact on national
security have reached a critical mass," Steinberg wrote. "That hacking
represents a danger to any industry and any type of business is by now a
veritable truism."

UNCHARTED TERRITORY

The SQL Slammer virus, which was a deceptively small and short program
that could be easily overlooked, also underscored the increasing
sophistication and unpredictable nature of attacks, making it virtually
impossible to quantify their impact, experts said.

http://story.news.yahoo.com/news?tmpl=story&u=/nm/20030128/wr_nm/tech_hacker_insurance_dc_1

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