BLOG: TalkTalk breach a warning for brokers
Thursday’s hacking left TalkTalk’s four million customers fearing the theft of bank and credit card details, while its shareprice initially nosedived before recovering today after the arrest and bail of a 15-year-old in connection with the attack.
As chief executive Dido Harding is put in the spotlight to defend the company’s security on national television, it seems likely remnants of the security breach could plague the company for years to come. Not only will TalkTalk have to cope with millions of compensation claims from its customers; its reputation and brand will take a long time to rebuild.
TalkTalk has confirmed that it has cybercrime insurance, but it wouldn’t comment on the scale of the cover it has in place.
The arrest of a 15-year-old Northern Irish boy in relation to the hacking points to a new generation of sophisticated criminals finding new ways to break through security.
Such is the high profile nature of the data breach, which has been likened to the Great Train Robbery in the media, we could see heightened demand for products to guard against data theft as a result.
General insurer Uinsure’s director of sales Jason Berry has admitted he would consider taking such a product for the business on top of the protection indemnity it currently has.
On the day the story first hit the headlines I was lucky enough to be shown around the Lloyd’s of London building on Lime Street, London, by its regional manager for UK & Ireland Keith Stern, who told me that specialist business protection against cyber-attacks will see innovation in the form of bespoke products when you consider the catastrophic impact of being hung out to dry on the news – and by your customers who seek compensation.
In the Lloyds Markets groups of underwriters called syndicates are crammed together to compete for insurance business tailored to a client’s specific needs. The markets are known for providing insurance for seemingly anything barring gambling, whether it’s Lionel Messi’s legs or Adele’s voice. But such a reputation shouldn’t detract from a professional service it provides.
With the right protection from one of Lloyds’ cover holders (firms operating within the market) businesses can be covered against the loss of data, the reputational risk and for the cost of paying for parties to put the business back together.
Business protection currently exists in the form of key person protection (profit protection), partner/director/limited liability partnership share protection, business loan protection and relevant life plan – none of which have cyber cover included as standard.
Some insurance providers offer separate policies, as Aviva launched a specific cyber cover product in June, but insuring against data theft is still in its infancy.
Whether you are a broker, lender or insurer, the TalkTalk attack is a warning shot the financial services sector should heed – as it looks to avoid sinking into the abyss.