In a sign of how essential cyber insurance has become, the nation’s largest state is considering a bill that would require some businesses to maintain cyber coverage.
In February, a bill was introduced in the California State Assembly that would require “any business that contracts with the state and has access to people’s personal information to maintain cyber insurance coverage,” according to this article in The Hill.
Federal lawmakers are paying close attention to Assembly Bill 2320. If enacted, experts say, the measure could have a positive and far-reaching impact.
“Cyberattacks are both common and hugely expensive,” write tech experts Anne Hobson and Ian Adams in The Hill piece. “Through risk assessments and requirements for baseline cyber practices, acquiring cyber insurance encourages robust cyber security and a higher degree of corporate resilience — saving us money and headaches.”
Consider these two statistics: (1) cyber incidents cost $200,000 on average (according to Hiscox), and (2) cyber attacks can be especially devastating to small businesses. An alarming 60 percent have to shut doors within six months of a significant attack.
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California has been a trailblazer in cyber law for years. In 2002, it passed the first state data breach law, “requiring businesses to disclose any breach of the security of personal information.”
“Over the next 16 years, all 50 states followed suit,” write Hobson and Adams. “Should it pass, AB 2320 may prove similarly prone to widespread adoption. With any luck, Congress will take a hard look at the right way to implement cyber insurance requirements.”
Law firms are increasingly seeing the need for cyber protection. Twenty-three percent of law firms suffered a security breach in 2018, according to the ABA Profile of the Profession. That’s up from 14 percent in 2016.
Thirty-four percent of firms have cyber liability insurance, the ABA reports. That’s up from only 11 percent in 2015.
“Viruses, spyware and malware were reported as fairly common problems,” the ABA Profile says. “Most law firms use spam filters (87 percent), anti-spyware (80 percent), a firewall (79 percent) and pop-up blockers (75 percent). About half (46 percent) say they encrypt their files.”
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