American International Group Inc., the biggest seller of cyber insurance to businesses, is bringing cyber insurance and risk mitigation services adapted from its CyberEdge commercial insurance product to its high net worth personal lines insurance clients.
AIG is offering the new product, called Family CyberEdge, to policyholders of its Private Client Group who are victims of threats including cyber extortion and cyber bullying. The insurance covers expenses related to data restoration and crisis and reputation management, among other claims.
In addition, AIG said it is collaborating with its strategic partner K2 Intelligence – an investigative, compliance and cyber defense services firm – to provide AIG Private Client Group policyholders with information that will enable them to manage their cyber risks more proactively. K2 Intelligence is partly owned by AIG.
Gaurav D. Garg, president and CEO of the Personal Insurance business at AIG, said CyberEdge is a product that AIG, with its scale and resources, is “uniquely capable of providing to individuals to thwart the growing threat of cyber risk.”
However, AIG is not alone in the personal lines cyber insurance market.
Chubb added cyber bullying coverage to its U.S. Masterpiece Family Protection policy last April to help cover clients and their families from the expenses associated with a cyber bullying incident. Chubb actually started adding cyber bullying coverage to its policies the United Kingdom in 2015.
The Hartford Steam Boiler Inspection and Insurance Co. (HSB), part of Munich Re, last June introduced HSB Home Cyber Protection, a personal lines cyber insurance program for consumers that bundles cyber insurance coverages once available only to businesses. The product is added to the homeowners or renters policies of insurance companies that partner with HSB.
Privilege Underwriters Reciprocal Exchange (PURE), another insurer of high net worth individuals and families, announced a similar product in 2015 in partnership with security firm Concentric Advisors. PURE’s insurance coverage is available under its high-value homeowners policy. PURE’s CyberSafe Solutions also promises to help individuals better assess, prevent, detect and respond to cyber threats.
AIG’s Private Client Group clients receive supplemental risk mitigation services, including a holistic assessment of devices, home networks, wireless access points and secure online accounts; training services for family members; online monitoring that assesses and tracks the availability of personal information; and a set of cyber assistance tools and resources including assistance from experienced fraud experts, provided by the identity and data defense specialist, CyberScout.
“The prevalence of smart applications and other technology has created exposure and risks that today’s households are not very well prepared to manage,” said Tracie Grella, global head of Cyber Risk Insurance at AIG. “As cyber threats become increasingly more sophisticated and intrusive, it is important for homeowners to have access to services and protection that help enhance cyber security, and that can react when that security fails.”
Eight out of 10 U.S. consumers have a home data network and more than a third of them connect entertainment systems, gaming consoles and other smart devices to the Internet, according to a recent survey from HSB. The same survey suggested that all of this connectedness is increasing the risk of home cyber attacks.
The HSB survey found that the most common type of non-physical damage experienced through attacks on home devices, appliances and systems were viruses or other unwanted software on their systems (59 percent) and damage to software or operating systems (45 percent).
Damage to home devices in a cyber-attack usually results in a financial loss, the survey showed, with 87 percent of the victims spending money to respond. About 42 percent of the victims in the survey spent between $1,000 and $5,000.
A 2015 household insurance study by JD Power found that 31 percent of homeowners indicated their home used at least one smart technology product.
According to Fitch Ratings, AIG is the leader in the $1 billion commercial cyber insurance market, followed by Chubb and XL Insurance.
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