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Target Breach Exposes Challenges of Underwriting Cyber for Business

Cyber insurance is essential for businesses today, but acquiring the appropriate coverage is a challenge.

By staff Writer | Updated on June 09, 2014
Shoppers arrive at a Target store in Los Angeles on Dec. 19, 2013, shortly after the retailer announced its cyber breach. (AP Photo)

Cyber insurance is essential for businesses today, but acquiring the appropriate coverage is a challenge, writes The New York Times. Citing Target’s infamous breach of its point-of-sale systems late last year, The Times says lack of data on cyber breaches and the inability to quantify losses from attacks make it difficult for insurers to underwrite the coverage.

The Times reports the most coverage a company can acquire using multiple underwriters is approximately $300 million—significantly less than the billions of dollars’ worth of coverage available in property insurance. At the time of its breach, Target had $100 million in cyber coverage, on top of a $10 million deductible, according to regulatory filings. The Times reports the coverage, which came from multiple carriers, will barely compensate for the $1 billion in losses some analysts are forecasting. Since the breach was discovered, the company has incurred $88 million in breach-related expenses, its filings say, and it expects insurance to cover $52 million of that.

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