Warren Buffett enters the cybersecurity insurance market
Insurance giant Warren Buffett is entering one of the most lucrative spaces in the industry.
Buffett’s Berkshire Hathaway Specialty Insurance unveiled on Tuesday two new insurance policies providing coverage for cyber liability and breach response, alongside resources for risk management.
Other highlights for both policies include, according to a company statement:
- Coverage for third party exposures resulting from data security and privacy breaches, including regulatory investigations, fines and penalties.
- Breach expense and extortion threat coverage, addressing the wide range of direct expenses an Insured incurs to effectively respond to a breach or extortion threat.
- Media liability coverage, which responds to traditional media exposures (e.g. through a company’s website) arising from electronic content.
- Business interruption coverage to pay lost income and related expenses incurred as a result of the Insured’s business’ partial or full interruption due to a network security failure.
- Online access to eRiskHub®, which provides state-of-the-market tools and resources to help policyholders understand cyber exposures, establish a breach response plan, and prepare to mitigate the impact of a breach on their organization. eRiskHub is provided via NetDiligence, a leading cyber security and e-risk assessment firm.
Danielle Librizzi, senior vice president and head of professional liability for Berkshire Hathaway, hailed the new product as a solution for companies with a wide variety of needs.
“Our experienced professional liability team is providing solutions to simplify for customers the complex work of managing professional liability and cyber exposures,” Librizzi said. “We are pleased to bring to market comprehensive, flexible coverage, backed by BHSI’s commitment to service and financial strength.”
The news comes as the cyber insurance market continues on track to triple its worth to $7.5 billion by 2020.
In September, a Pricewaterhouse Coopers report warned that in order to take advantage of this growing demand, insurers needed to create better products, or face likely disruption from technological players like Google.
“If the industry takes too long, there is a risk that a disruptor could move in and corner the market by aggressively cutting prices or offering much more favorable terms,” PwC notes.
The report highlights the relatively high prices insurers are charging for cyber cover, as well as restricting limits characteristic of policies in the admitted market.