How do you insure the intangible?

Cyber-liability: new and fast growing.

Cyber liability insurance is a newly-established insurance category in the UK, estimated by the industry to represent GBP3–4 million, or just 0.01 per cent of the country’s non-life gross written premiums. However, this belies the market potential, with an estimated 4.8 million private businesses registered in the UK and growing use of the internet among these firms.

Indeed, it is developments in the use of information technology for business that have highlighted the issue of liability in cyberspace. Firms collect, manage and store data electronically, social media interaction has increased and portable computing devices are growing in popularity. This technological evolution means UK firms are increasing their exposure to cyber threats such as hacking, extortion, data leaks and business downtime, all of which could result in an onerous financial burden to resolve.

A number of high-profile data leaks during 2011 and 2012 highlighted the costs involved when personal data is exposed. Beyond the obvious monetary costs of launching an investigation and settling compensation payouts comes the costs which are more difficult for underwriters and businesses to quantify: damage to reputation, business disruption and lost business all have to be taken into consideration. A joint industry and government report, the Information Security Breaches Survey for 2013, calculated that in the aftermath of its most serious data breach, the highest cost to a large firm (more than 250 employees) stemmed from damage to reputation, followed by response costs and business disruption (see chart, below). For smaller businesses the cost of business disruption is, on average, eight times higher than any other resulting cost.

Average cost of a large organisation's worst cyber incident (GBP, 2012)

Industry surveys suggest a low awareness of cyber liability products among UK businesses. In all likelihood, managers believe these intangible risks are covered by their existing commercial liability insurance policies, yet traditional policies do not tend to address issues related to the internet or electronic data.

If the growing risk in the impalpable world of cyber data does not provide the catalyst for uptake of cyber liability insurance, regulatory changes will likely prove the strongest incentive for British businesses. The European Commission (EC) aims to harmonize laws on the protection of personal data across the EU. In the event of personal data being exposed, firms will be mandated to notify national authorities - the Information Commissioner's Office in the UK - and will face fines for non-compliance. The new law is slated for introduction in 2014 and is expected to be the primary growth driver of cyber liability insurance over the next five years.

This piece first appeared on Timetric

Photograph: Getty Images

Rebecca Larkin is an economist at Timetric

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Theresa May’s stage-managed election campaign keeps the public at bay

Jeremy Corbyn’s approach may be chaotic, but at least it’s more authentic.

The worst part about running an election campaign for a politician? Having to meet the general public. Those ordinary folk can be a tricky lot, with their lack of regard for being on-message, and their pesky real-life concerns.

But it looks like Theresa May has decided to avoid this inconvenience altogether during this snap general election campaign, as it turns out her visit to Leeds last night was so stage-managed that she barely had to face the public.

Accusations have been whizzing around online that at a campaign event at the Shine building in Leeds, the Prime Minister spoke to a room full of guests invited by the party, rather than local people or people who work in the building’s office space.

The Telegraph’s Chris Hope tweeted a picture of the room in which May was addressing her audience yesterday evening a little before 7pm. He pointed out that, being in Leeds, she was in “Labour territory”:

But a few locals who spied this picture online claimed that the audience did not look like who you’d expect to see congregated at Shine – a grade II-listed Victorian school that has been renovated into a community project housing office space and meeting rooms.

“Ask why she didn’t meet any of the people at the business who work in that beautiful building. Everyone there was an invite-only Tory,” tweeted Rik Kendell, a Leeds-based developer and designer who says he works in the Shine building. “She didn’t arrive until we’d all left for the day. Everyone in the building past 6pm was invite-only . . . They seemed to seek out the most clinical corner for their PR photos. Such a beautiful building to work in.”

Other tweeters also found the snapshot jarring:

Shine’s founders have pointed out that they didn’t host or invite Theresa May – rather the party hired out the space for a private event: “All visitors pay for meeting space in Shine and we do not seek out, bid for, or otherwise host any political parties,” wrote managing director Dawn O'Keefe. The guestlist was not down to Shine, but to the Tory party.

The audience consisted of journalists and around 150 Tory activists, according to the Guardian. This was instead of employees from the 16 offices housed in the building. I have asked the Conservative Party for clarification of who was in the audience and whether it was invite-only and am awaiting its response.

Jeremy Corbyn accused May of “hiding from the public”, and local Labour MP Richard Burgon commented that, “like a medieval monarch, she simply briefly relocated her travelling court of admirers to town and then moved on without so much as a nod to the people she considers to be her lowly subjects”.

But it doesn’t look like the Tories’ painstaking stage-management is a fool-proof plan. Having uniform audiences of the party faithful on the campaign trail seems to be confusing the Prime Minister somewhat. During a visit to a (rather sparsely populated) factory in Clay Cross, Derbyshire, yesterday, she appeared to forget where exactly on the campaign trail she was:

The management of Corbyn’s campaign has also resulted in gaffes – but for opposite reasons. A slightly more chaotic approach has led to him facing the wrong way, with his back to the cameras.

Corbyn’s blunder is born out of his instinct to address the crowd rather than the cameras – May’s problem is the other way round. Both, however, seem far more comfortable talking to the party faithful, even if they are venturing out of safe seat territory.

Anoosh Chakelian is senior writer at the New Statesman.

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