In-brief: Insurance giant AIG announced Monday that it has started offering cyber insurance to protect individuals and families from ransomware attacks, data theft and cyber bullying. But don’t go looking to sign up at Wal-Mart: the service is only available to AIG’s high net worth customers.
Insurance giant AIG announced Monday that it has started offering cyber insurance to protect individuals and families from ransomware attacks, data theft and cyber bullying. But don’t go looking to sign up at Wal-Mart: the service is only available to AIG’s high net worth and ultra high net worth customers.
The service is the first of its kind to provide what insurers call “first party coverage” -basically: insurance to make the affected party whole after an adverse incident. In a sign of the times, AIG said it will pay for things like school relocation for children traumatized by cyber bullying and ransom to cyber criminals in the hope of restoring data and technology held hostage by crypto-ransomware.
The service is offered to families and individuals who are customers of AIG’s Private Client Group, typically clients who have real estate or other assets like boats or art with a value of more than $1 million, said Jerry Hourihan, president of AIG’s Private Client Group for the U.S. and Canada.
Hourihan said that the new service is based on similar insurance that AIG offers to businesses and is a response to inquiries and demands from its high net worth clients, who have become increasingly concerned about cyber threats, he said. The insurance would be purchased as a so-called “rider” to a traditional home insurance policy and add about 10% or 15% to the annual premium.
“Our clients have domestic employees and family offices to help manage their lives. They take on quasi commercial exposure.” – Jerry Hourihan, AIG Private Client Group
Working with the firm K2, AIG will help clients secure their homes from cyber attack, and send out technicians to help customers recover from attacks after the fact. For example: AIG might provide help to break encryption used by ransomware to arranging to pay the ransom (when that fails) to restoring personal or home networks following an attack, Hourihan said.
Wealthy individuals and families are increasingly exposed to cyber risk because they are enthusiastic adopters of new technology, from smart phones to smart- and connected home products. All those new systems create new avenues for attacks like data theft and cyber extortion, he said. AIG has about 85,000 customers in its Private Clients Group, including 40% of the Forbes 400 most affluent Americans.
The rise in ransomware is a driver of customer interest but it is hardly the only driver. High net worth individuals and families are at risk of having data stolen and posted online as well as other types of harassment. High net worth families and individuals are an attractive market for AIG because their needs track closely to those of businesses. With staff (domestic employees) and “family offices” to manage their affairs, high net worth families and individuals are essentially businesses, which makes tailoring insurance products to them easier, said Hourihan.
“They take on quasi-commercial exposure,” he said.
There are no plans to offer similar policies to families of ordinary means. Still, cyber insecurity is widespread and costly. Almost 1.4 billion data records were exposed in 2016, many of them lost as a result of identity theft, according to a report released by the firm Gemalto.
Also, a survey of 2,000 U.S. consumers released by the firm Accenture found that 26 percent of U.S. consumers have had their personal medical information stolen from technology systems. Of those, around half (50 percent) were victims of medical identity theft.