53.2 F
Laguna Hills
Thursday, Mar 28, 2024
-Advertisement-

Marsh Risk Debuts Web Product, Looks at Insuring IPOs

Marsh Risk has unveiled a new product to take advantage of the booming Internet economy and is working on another product aimed at the flurry of companies going public.

Marsh’s new NetSecure package covers perils such as cybercrime, hacking, copyright infringement in cyberspace, loss of service and other technology-related problems.

“We are pushing the envelope,” said Emily Freeman, Marsh’s national practice leader for e-business risk solutions, who developed the NetSecure product.

“Its exciting to see that the insurance industry and large brokerages are acting at a fairly fast pace to address the new needs for coverage in cyberspace,” said Marc Maister, a partner who specializes in insurance in the OC office of law firm Irell & Manella.

One problem they may face is there is not a lot of historical data to provide the actuarial data that the underwriters ordinarily like to have when writing policies. “It takes a while for them to accumulate this kind of data,” Maister said.

Also, “people think technology is invincible,” said Freeman. But technology has had its share of problems, anywhere from software bugs and viruses to employee theft and hacking, which can shut a company’s operations down.

Over the last two years, Marsh has partnered with companies like IBM, ISS and EDS for consulting services related to Internet and technology issues, to figure out how to write the policies and negotiate the premiums.

The new product may prove a boon, especially since the recent denial of service attacks that plagued Yahoo, Amazon, CNN and Buy.com. And Freeman said there is a lot more hacking going on. “What you hear in the media is the tip of the iceberg.”

Since introducing the product, Marsh has written 12 NetSecure policies and has five more in the works.

“The clients love it,” said Trindl Reeves, a senior vice president in Marsh’s Newport Beach office. As for local prospects, Reeves said that FileNet and Buy.com are looking for insurance for their cyberspace operations.

Marsh’s underwriters for the NetSecure policies,Zurich, AIG, Lloyd’s of London and Chubb,are four of the largest of the hundreds of underwriters. And more insurers are jumping on the Internet bandwagon.

“I expect this will be an ongoing phenomenon as cyberspace liability becomes more established and well known, ” Maister said.

Marsh also is developing an insurance program for companies that are trying to go public, so that they can recoup their soft costs if the IPO is aborted. However, that program has yet to find an underwriter.

IPOs can get expensive in a hurry with the road show, attorney fees, accosting fees, printing costs and marketing budgets.

The idea for the product came from Deloitte & Touche, said Reeves, but Marsh is having trouble getting it underwritten.

“It’s a hard one; I haven’t found someone to bite off on it,” Reeves said.

She also said that Marsh’s clients want it, but “there needs to be more experience with this.” One of the main problems with underwriting the insurance product is understanding what will abort an IPO.

“The market is very tough. We’d have to figure out what the trigger is,” Reeves said. An IPO can be aborted for any number of reasons,from a lawsuit to market volatility. Reeves said that one company she knows of has attempted four IPOs. n

Want more from the best local business newspaper in the country?

Sign-up for our FREE Daily eNews update to get the latest Orange County news delivered right to your inbox!

-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-
-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-