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ybercrime insurance may be coming to a business near you

With staggering amounts of business and personal information out there in cyberspace, concern about cybercrime is growing. What about insurance policies to cover electronic crime? While this trend may not have reached Mississippi yet, it may be just a matter of time.

“Insurance makes a lot of sense,” says Tom Clancy, director of the National Center for Justice and the Rule of Law at the University of Mississippi. “I have not heard about it specifically in Mississippi, but the amount of crime that moves online is phenomenal.”

He feels cybercrime is dramatically increasing and says the center has a variety of ways to increase resources and educational opportunities for state prosecutors to help them be better able to investigate and prosecute people accused of cybercrime.

“There are many types of vulnerabilities that companies are trying to protect against such as fraud and computer intrusion,” Clancy added. “Companies have a lot of exposure and significant risk with trade secrets and personnel information, but I think American businessmen are too smart to let this one slide.”

A program of the Ole Miss School of Law, the center has a relationship with the State Attorney General’s office where a computer crime unit was created in 2001. Elizabeth Hocker of the Attorney General’s Office sees a growing need for the computer crime unit and she too feels the amount of computer crime is growing dramatically. She said the new unit has relationships with similar units in other states and the National Association for Attorneys General to track that growth.

Dudley Wooley, president and CEO of Jackson-based insurance company Ross & Yerger, says there isn’t a lot of this type of coverage in the state, but that from time to time his agency talks to commercial accounts about it. There are a lot of different names for it. Internet liability is one he’s seen.

“We talk about all kinds of products to cover exposure and this is one more,” he said. “It’s extremely tedious because there’s no way to predict the extent of damages and how to put a value on it.”

Another insurance executive, Scott Naugle, executive vice president of Stewart Sneed Hewes/BancorpSouth, answered affirmatively that he knows of insurance companies who are coming out with policies for homeowners to cover cybercrime.

“Most coverage right now is for homeowners and individuals concerned with bill paying, checks deposited electronically and ATM numbers,” he said. “There’s a lot of attention to identity theft. We’re seeing some companies offer coverage and some people buying it.”

The Pass Christian resident believes the new type of coverage will become more prevalent in the electronic world. “The old stereotype of a man in black clothes breaking into your house is outdated. Now he can be doing it from his computer thousands of miles away,” he said. “It’s electronic burglary.”

Naugle has not yet seen any claims filed but he observes a heightened awareness and thinks it’s becoming increasingly more important for businesses and individuals to be aware of cybercrime.

Jackson computer consultant Michael Tims doesn’t know of any of his customers who have computer crime insurance coverage. “I don’t know how it would work or how anyone would put a dollar value on it, but it’s an interesting concept,” he said.

As a service to customers, he provides off-premise backup data files as his own form of information insurance. “I have seen people really hurt by not having data backed up,” he said, “and computer systems can mess up at the most inopportune times.”

Bill Moak, executive director of the Better Business Bureau of Mississippi, says he’s not aware of any of his 1,500 members having cyber insurance coverage, but thinks it could be a wise thing to do.

“With the way electronics are growing exponentially, it could be a part of an organization’s response along with preparedness, firewalls and having systems checked for security holes,” he said. “It probably will be something we’ll learn more about in the future.”

The owner of Burton Computer Services of Long Beach, Richard Burton says he too is unaware of any businesses having this type of insurance coverage. He gives basic education about Internet habits to his customers and recommends programs to ward off viruses and Trojans.

“As long as software is imperfect, there will be vulnerabilities,” he said.

The Internet Security Alliance’s Web site is a source of information on this subject and provides a 12-step program of security and case studies for small businesses. The first of the 12 steps is “use strong passwords and change them regularly.” The URL is www.isalliance.org.

Contact MBJ contributing Lynn Lofton at mbj@msbusiness.com.


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