If you follow the insurance space at all, then you have heard a lot about Equifax recently. If you have not, here’s what you need to know–Equifax is a consumer credit reporting agency that suffered a massive data breach back in July. They announced the breach to their customers in August, and are currently dealing with the consequences of such a pervasive breach of customer data. What does such a massive breach mean for the company? Time will tell, luckily they do have a cyber insurance policy, but is it enough?
According to Bloomberg, Equifax’s cyber insurance policy will be able to absorb about $100 million to a $150 million in damages. These costs would be shouldered by a multitude of carriers, so as not to put any one out of business. Unfortunately, the total cost to Equifax of this data breach may not be done for several years.
Perhaps even more unfortunately, many analysts predict that the final cost will be several times higher than that $150 million insurance payout. One simply has to look at the staggering dollar amounts companies who have faced similar breaches, like Yahoo and Target, were forced to pay to understand the depth of the fiscal problems Equifax now finds itself facing.
Bloomberg reached out to Equifax for a comment on their coverage and received the following email in reply: “Equifax carries cybersecurity, crime, general-liability and other lines of insurance, and we have begun discussions with our carriers regarding the incident.”.
Equifax knew that their cyber insurance policy may not be enough to effectively mitigate the financial risks of a security breach. In their annual company report Equifax wrote: “Our property and business interruption insurance may not be adequate to compensate us for all losses or failures that may occur. Also, our third-party insurance coverage will vary from time to time in both type and amount depending on availability, cost and our decisions with respect to risk retention.”.
As of September 8th, Equifax shares were down 14% in response to the breach. Those shares could continue to fall as more information about this incident comes out. If you are an Equifax customer, take the time to reach out and figure out if your data was affected, and find out what you need to do next to protect your privacy.