WIN Magazine - Summer 2017 - 17
coverage. Unfortunately, because
this is still a "new" product, the
market has not yet reached a level
of standardization in coverage scope,
defined terms or terminology. As a
result, comparing coverage offered by
one carrier to that offered by another
2. THE ADEQUACY OF LIMITS.
Companies often heavily rely on
insurance brokers to advise them on
the amount of insurance they should
purchase. When answering this question in connection with traditional
lines of insurance, the broker has significant historical and industry/peergroup data upon which they can rely.
This data does not yet exist when it
comes to cyber insurance products. To
further complicate things, many cyber
insurance products contain multiple
different limits, with sub-limits and
even sub-limits within sub-limits.
3. STAND-ALONE COVERAGE. Cyber
risk does not (yet) fit squarely
within any one insurance product.
As a result, insurance brokers must
consider and advise clients on how a
stand-alone cyber insurance policy
would interact with the company's
other traditional insurance policies,
such as comprehensive general liability, crime, property and professional
liability. Evaluating the overlap and
interaction is challenging and time
consuming and requires an in-depth
knowledge of insurance products and
coverage across multiple lines of business. Unfortunately, the challenges
facing brokers will likely multiply;
at least until the cyber insurance
market has some sufficient loss data
behind it and finds some semblance
The learning curve is steep because
technology is rapidly changing, hackers
are becoming more sophisticated and
laws are constantly evolving. There is no
question that brokers are in a conundrum.
No policy is "one-size fits all" in the cyber
insurance world. At a minimum, cyber
insurance brokers should be asking the
right questions to ensure the business is
covered for potential losses from a cyber
breach. Rigorous training and education
is the best way for agents and brokers
to prepare themselves. As Benjamin
Franklin once said, "An investment in
knowledge pays the best interest."
1 Smith (2015). "Cyber Insurance rejects claim after
BitPay lost $1.8 million in phishing attack." Network
World. Retrieved from http://www.networkworld.
2 P.F. Chang's China Bistro, Inc. v. Fed. Ins. Co., No.
CV-15-01322-PHX-SMM, 2016 WL 3055111 (D. Ariz.
May 31, 2016).
Elizabeth S. Fitch, CIPP/US,
is managing partner with
the Righi Fitch Law Group in
Phoenix, AZ; contact her at
Theodore M. Schaer,
CIPP/US, is a partner in
the Zarwin, Baum, DeVito,
Kaplan, Schaer & Toddy
law firm in Philadelphia,
Pennsylvania; contact him
AAMGA.ORG | S U M M28/10/16
E R 2017