Clients could sue under errors and omissions clauses

Brokers could face legal action from clients that do not have adequate protection against cyber-crime, Ace has warned.

Gareth Tungatt, senior underwriter for technology and e-commerce at Ace, said that brokers that did not offer clients cover for the escalating range and scale of cyber-related threats could be sued by policyholders in the event of an uncompensated attack.

Tungatt said: “The growth of the risk could potentially have a negative impact on brokers that do not recognise it and offer it at renewal.

“There would be potential for recourse on the grounds of errors and omissions if clients suffered a cyber-attack for which [they were] not protected.”

His comments come as security experts continue to stress the need for companies to review their data protection practices, following a slew of attacks that have seen numerous high profile business and government targets breached – including the House of Commons, the Pentagon and eBay.

Cyber-attacks include privacy breaches leading to data theft, uploading of malware and viruses, violation of intellectual property rights, and the crippling of computer systems, known as a denial of service attack.

The UK cyber-risk market is currently valued at between £15m and £20m, but has been touted as a leading emerging risk.