Sony Pictures Entertainment holds $60 million in Cyber insurance with Marsh, according to documents leaked by the group claiming responsibility for the attack on the movie studio.
The documents, covered in detail by Steve Ragan at CSO, say that after sonypictures.com was breached in 2011, Sony made a claim of $1.6 million with Hiscox, its Cyber provider at the time. The insurer declined to quote at renewal, so Sony Pictures turned to Lockton, which brokered a $20 million policy that included $10 million in self-insured retention.
Around April 1 of this year, Sony moved its Cyber policy to AIG, when it acquired $10 million in coverage. This policy, effective until April 1, 2015, overlaps with its existing coverage, Ragan writes. In May, the movie studio turned to a new insurance broker, Marsh, which reached out to Brit Insurance, Liberty International Underwriters, Beazley and other carriers to secure upward of $60 million in coverage.
Policy details say that the studio consolidated coverage with Sony Corporation of America, with a $5 million retention at an annual cost of $356,963. The policy includes security and privacy liability coverage, as well as event management, network interruption, cyber extortion and regulatory action.
But is $60 million enough coverage? After the hackers ("Guardians of Peace") threatened a terrorist attack on Christmas Day at theaters showing Sony's film "The Interview," five of the country's largest chains, including AMC and Regal Entertaiment, pulled the movie from their lineups. In turn, the studio canceled the release of the film.
A Seth Rogen comedy about a television crew that plots to kill North Korean leader Kim Jong Un, "The Interview" reportedly cost $80 million to make and market, but the expenditures are growing.
“The cost to Sony from new software and hardware, employee labor to clean up the mess, investigation, lost productivity, and reputational damage, just to name a few, is at least over a $100 million and growing daily,” said Hemanshu Nigam in a Bloomberg interview. Nigam founded the cybersecurity firm SSP Blue and has worked with Microsoft Corp. and News Corp.
The cost now includes a lawsuit filed against the studio by two former employees, who accuse Sony Pictures of knowing it had inadequate cybersecurity measures in place and failing to protect the personal information of thousands of workers.
What could have been the film's future earnings--from video-on-demand and Blu-ray/DVD purchases--won't soften the blow. Sony Pictures told USA Today Dec. 18 that it won't make the film available on any platform.
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