Subprime Liability Claims Could Reach $4B

Fitch Ratings reported that subprime mortgage-related liability litigation would reach between $3 billion and $4 billion in directors and officers' (D&O) and errors and omissions (E&O) losses. However, if credit woes continue to spread into sectors indirectly linked to the subprime mortgage market, loss claims could rise significantly and lead to a hike in the number of bankruptcies. Subprime investments, according to Fitch, will continue to decline in value throughout the year. The ratings agency stated, "Further, highly illiquid, volatile market conditions have spread somewhat to other asset classes, which could impact insurers' broader investment portfolio performance."

CyberRisk in the News

Two articles in today's business news stood out to me.

• TJX paid over $24 Million to MasterCard for a massive breach that exposed millions of payment card holders to hackers. This is on top of the $40.9 Million they paid to Visa.
• At least 8.3 Million records were breached in the 1st quarter of 2008.

39 states and DC have laws now requiring organizations to notify consumers of a data breach that jeopardizes their personal or financial data. That notification in itself can be very expensive; however, in many states businesses have to go further and pay for a years' worth of credit monitoring.

Several insurance companies have relatively inexpensive coverages to this growing risk. Today, many business and non-profit organizations keep financial and personal data on their employees, their customers, and their members. Don't become a Headline! Call your independent insurance agent.