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Home / Insurance / Continuous 4-day cyberattack on New Zealand Stock Exchange emphasizes the importance of insurance coverage for cyberattacks and having a sound strategy to maximize recovery

Continuous 4-day cyberattack on New Zealand Stock Exchange emphasizes the importance of insurance coverage for cyberattacks and having a sound strategy to maximize recovery

Trading on the New Zealand Stock Exchange was disrupted last week after four consecutive days of repeated cyber attacks that resulted in disruptions affecting the markets for debt, equities and derivatives. The DDoS attack, which is said to have originated offshore, is reportedly part of a global blackmail system that has also targeted companies such as PayPal and Venmo. As this type of cyberattack is only becoming more common and sophisticated, it is important for policyholders to focus on a variety of available insurance options to protect against and maximize their insurance recovery after losses from a cyberattack.

Cyberattacks can lead to both first -Party losses, such as the cost of equipment damage, data recovery and business outages; as well as third-party losses, such as costs arising from customer claims due to data breaches and confidentiality (and related defense costs, which can often be millions of dollars). Fortunately, different types of insurance can often cover both pre- and third-party losses after a cyberattack.

The first place for a policyholder to look for potential coverage after a cyberattack is the standalone cyber insurance policies. However, it is important for wise policyholders to look at all other policies in their portfolio after a cyberattack. Very often, coverage for the various losses after a cyber attack can be found in other, more "traditional" forms of coverage, including (among others):

Policies with both first and third party coverage: [1

9659007] Cyber ​​policies provide usually coverage for data damage (including data loss and recovery) and for business interruptions. In addition, cyber policies often cover expenses related to loss of reputation and the employment of experts to identify and address potential weaknesses in the system.

First-party coverage policy:

  • Insurance for the property's "all risks" may cover for physical damage to computer and network equipment as well as for related business interruptions.
  • Crime policy can cover expenses related to a data breach due to social technology, as well as loss of funds due to computer and other types of fraud.

Third Party Coverage Policy:

  • CGL policies that have broad sections for advertising or personal injury may cover breaches of privacy costs resulting from "subsequent" disputes, including third party litigation by dissatisfied or affected users and clients.
  • D&O policies often provide a broad coverage area for the "wrongdoing" of an official or director (and sometimes a company), which can also trigger coverage after a dangerous cyberattack.
  • E&O policies may provide coverage for litigation related to a third party client.

As the cyber attack on the New Zealand Stock Exchange shows, cybercrime will probably only continue to be graded and sophisticated. DDoS attacks increased by 542% in the first quarter of this year, compared to the last three months of 2019, according to cybersecurity company Nexusguard. How insurance coverage will respond to the ever-changing threat of cyber risks largely depends on how a policyholder's insurance program is structured and the specific provisions and exceptions in each type of insurance. Thus, it is imperative for policyholders to carefully review all coverage provisions under all insurances, both at the time of purchase and at the point of complaint, in order to maximize their chances of recovery. [19659020]
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