You choose, we deliver
If you are interested in this story, you might be interested in others from The Journal Gazette. Go to www.journalgazette.net/newsletter and pick the subjects you care most about. We'll deliver your customized daily news report at 3 a.m. Fort Wayne time, right to your email.
Advertisement

Cyber insurers’ clientele widens

Jim Thorneburg invented Thorlo’s socks in 1980 and set out to build a brand worthy of the slogan “caretakers of the world’s feet.”

His company, Thorlo Inc., recently found out that it’s also in the business of taking care of customer data. In January, the Statesville, N.C., business discovered that hackers had been intercepting information on the Web after a customer reported a fraudulent credit-card charge.

“It was quite shocking to us that our little company got on the radar screen of people like this,” said Lynn Thorneburg, the owner’s son and Thorlo’s general counsel.

Smaller companies are learning that, as more data is shared online, they, too, can be targets for the kinds of attacks that larger firms endure. American International Group and Travelers Cos. are among insurers tailoring cybersecurity products to those customers.

Small and mid-size companies are “where we’re going to see some of the most aggressive growth in the next couple of years, because it’s been a part of the market that was ignored,” said Bob Parisi, network security leader at Marsh Inc., the insurance brokerage of Marsh & McLennan Cos.

Insurers have been selling cyber insurance for more than a decade to help clients shoulder costs from data breaches, computer viruses and other types of electronic fraud.

The policies typically cover liability from hacking and provide technical support. They can also defray costs of complying with laws that require companies to notify customers when private information has been compromised.

Cyber risks have gained renewed national attention after revelations about a breach of a U.S. Federal Reserve website, intrusions at the New York Times attributed to Chinese hackers, and a wave of so-called denial-of-service attacks on the biggest U.S. banks and payment networks.

Awareness of computer crime and more affordable policies are leading smaller businesses to view cyber insurance as essential, Marsh said in a report this month.

The number of clients buying the coverage climbed by 33 percent last year from 2011, the broker’s data show. Service businesses including accounting and law firms led the gains.

At AIG, cyber-coverage premiums climbed by more than 20 percent last year, according to Tracie Grella, the insurer’s global head of professional liability for financial lines.

Travelers, the only property insurer in the Dow Jones Industrial Average, introduced cyber-insurance coverage focused on small businesses in January after seeing a gain in demand from customers and agents, said Tim Francis, the New York-based company’s enterprise cyber-insurance lead.

Smaller businesses used to have a mentality that “nobody’s going to even bother to hack into my business, they’re after bigger fish,” he said. “That really isn’t the case. …There are bad guys out there that are looking to get information in the easiest way possible.”

Advertisement