I was having some security conversations last week and cybersecurity insurance came up as a topic. This isn’t overly unusual as it’s a pretty popular topic, but someone said something that really got me thinking.
What if the insurance covered the customers instead of the companies?
Now I understand that many cybersecurity insurance policies can cover some amount of customer damage and loss, but fundamentally the coverage is for the company that is attacked, customers who have data stolen will maybe get a year of free credit monitoring or some other token service. That’s all well and good, but I couldn’t help myself from thinking about this problem from another angle. Let’s think about insurance in the context of shoplifting. For this thought exercise we’re going to use a real store in our example, which won’t be exactly correct, but the point is to think about the problem, not get all the minor details correct.
If you’re in a busy store shopping and someone steals your wallet, it’s generally accepted that the store is not at fault for this theft. Most would put some effort into helping you, but at the end of the day you’re probably out of luck if you expect the store to repay you for anything you lost. They almost certainly won’t have insurance to cover the theft of customer property in their store.
Now let’s also imagine there are things taken from the store, actual merchandise gets stolen. This is called shoplifting. It has a special name and many stores even have special groups to help minimize this damage. They also have insurance to cover some of these losses. Most businesses see some shoplifting as a part of doing business. They account for some volume of this theft when doing their planning and profit calculations.
In the real world, I suspect customers being robbed while in a store isn’t very common. If there is a store that gains a reputation for customers having wallets stolen, nobody will shop there. If you visit a store in a rough part of town they might even have a security guard at the door to help keep the riffraff out. This is because no shop wants to be known as a dangerous place. You can’t exist as a store with that sort of reputation. Customers need to feel safe.
In the virtual world, all that can be stolen is basically information. Sometimes that information can be equated to actual money, sometimes it’s just details about a person. Some will have little to no value like a very well known email address. Sometimes it can have a huge value like a tax identifier that can be used to commit identity theft. It can be very very difficult to know when information is stolen, but also the value of that information taken can vary widely. We also seem to place very little value on our information. Many people will trade it away for a trinket online worth a fraction of the information they just supplied.
Now let’s think about insurance. Just like loss prevention insurance, cybersecurity insurance isn’t there to protect customers. It exists to help protect the company from the losses of an attack. If customer data is stolen the customers are not really covered, in many instances there’s nothing a customer can do. It could be impossible to prove your information was stolen, even if it gets used somewhere else can you prove it came from the business in question?
After spending some time on the question of what if insurance covered the customers, I realize how hard this problem is to deal with. While real world customer theft isn’t very common and it’s basically not covered, there’s probably no hope for information. It’s so hard to prove things beyond a reasonable doubt and many of our laws require actual harm to happen before any action can be taken. Proving this harm is very very difficult. We’re almost certainly going to need new laws to deal with these situations.