Business Resiliency Insurance combines Data Breach Reputation Guard and Outsource Protector
Broker Lockton and Lloyd's insurer Kiln have unveiled a new product to protect companies from data breaches and potential losses from outsourcing deals.
The product, Business Resiliency Insurance, is designed to help mitigate direct losses of business income and related expenses as a result of major data breaches (Data Breach Reputation Guard) and direct losses from a disruption to an outsourcing or off-shoring agreement (Outsource Protector).
Emily Freeman, Executive Director of Lockton’s Technology and Media team in London, said: “Companies that experience adverse publicity from major data breaches often face a loss of revenue and profits and an increase in expenses because consumers become fearful about the security of their credit card information.”
Dan Trueman, special risks underwriter at Kiln, said: “When a data breach is followed by adverse media attention, the Data Breach Reputation Guard element of the policy will reimburse a business for reputational harm. This means it is covered specifically against the loss of net profit – the difference between anticipated income and actual income that follows a breach – and additional related expenditures incurred during the defined period of indemnity.”
The second major area of new coverage, Outsource Protector, addresses non-performance risks associated with outsourcing and off-shoring. Critical business functions, such as call centres and financial processing, and information technology functions such as network management and programming, are increasingly performed by independent contractors, typically to reduce expenses and improve efficiency.
“Non-performance risks arise when the vendor is unable to fulfill the contract due to political violence, forced divestiture, licence cancellation, terrorism and other causes", added Freeman. “Outsource Protector will reimburse the named insured for abandonment and relocation costs as well as extra contractual costs of working during the period of indemnity as a direct result of a variety of force majeure perils defined in the policy.”