Data breach insurance

13 03 2008

I guess it makes sense… with all of the high-profile data breaches that have happened in the last couple of years (TJX Cos, CIBC, Passport Canada, Bell, Rogers) the insurance industry sees a new market. Executive Risk Insurance Services (based in Toronto) are offering companies an insurance product that helps them deal with security breaches. Their coverage goes beyond basic financial consideration and includes notifying and reimbursing customers.

I guess this product is a good choice for major companies with large databases that are attractive to hackers. But I’m wondering whether purchasing this sort of insurance might lead companies to be less vigilant about protecting their customer data. Might we overhear a CEO saying: “Ah, we don’t need to be too concerned about that breach, the insurance policy will cover our financial loss.” Yes, but what about the customers?

Today’s Globe and Mail has the story, you can read it here.

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