June 8, 2007 by Canadian Underwriter
The rapid increase of insider-related security breaches and of stolen computer equipment and data storage devices has unnerved the Canadian business community, creating a greater demand for data loss liability coverage products, says Aon Financial Services Group Canadian Advisory.
Under lock and key: risk transfer solutions to limit liability for security and privacy data breaches explains that while commercial general liability (CGL) policies may appear to provide some coverage for third-party losses, some U.S. courts have recently ruled that data is not considered tangible property under certain CGL policies and, as a result, have excluded coverage.
While most litigious activity involving data security breaches is initiated in the U.S., Canadians are catching on quickly, the report warns.
Class action lawsuits have been filed against Winners and HomeSense in six provinces for damages arising out of the TJX security breach, the report says.
The costs in connection with the potential liability to third parties for privacy and data breaches due to corporate negligence, is a growing concern.
As a result, a number of insurance carriers have developed specific privacy and data loss liability coverage products that provide coverage for businesses when data in their care and control is compromised, Brian Rosenbaum, Aon Financial services group, legal practice, wrote in the report.