Archive for Tuesday, July 11, 2000

Lloyd’s, computer firm team up against hackers

July 11, 2000


— Lloyd's of London will offer insurance coverage against losses caused by hackers to clients who use the computer security firm Counterpane Security Inc.

In its announcement Monday, Counterpane claimed to be the first Internet security service provider to offer a guarantee of direct financial reimbursement in the event a hacker penetrates its defenses.

The guarantee to provide up to $100 million in coverage is underwritten by insurance brokers Frank Crystal & Co. and SafeOnline, with additional coverage available from Lloyd's, a world leader in insurance.

"This is not for your home user," said Bruce Schneier, chief technology officer at Counterpane. "This is for Yahoo!, this is for CDUniverse, which lost all those credit card numbers (to a hacker) in January."

Standard computer security includes firewalls, constantly updated antivirus software and other hacker-blocking systems.

Various organizations have estimated that hacker attacks this year had cost businesses tens of billions of dollars, mostly in lost time. A study released last week by Jericho, N.Y.-based Reality Research estimated businesses worldwide would lose more than $1.5 trillion this year because of computer viruses spread through the Internet.

Counterpane's Schneier said a $20,000 annual premium would provide coverage for $1 million in hacker losses; the cost rises to $75,000 for $10 million in losses. Additional coverage, up to $100 million, must be negotiated with Lloyd's.

Analysts say the hacker insurance market is expected to grow to billions of dollars in premiums by the end of the decade.

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