If there is a way to make a dollar or two off of secular trends, chances are high that Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK-A) may be interested in profiting from it. Cybersecurity is one of those themes that is becoming secular — and it has reached a critical point where companies that neglect the threat are simply being poor stewards and fiduciaries. Now Buffett and Berkshire Hathaway want a piece of that action.
Berkshire Hathaway Specialty Insurance (BHSI) unveiled two new types of insurance policies on Tuesday, providing cyber liability and breach response coverage. The company now offers risk management resource policies: the Professional First Network Security & Privacy Policy and the Professional First Professional Liability and Network Security & Privacy Policy. Berkshire Hathaway indicated that the latter also includes customizable errors and omissions liability coverage.
Cybersecurity is one of those areas in which companies are underinvested, and the same goes for insuring themselves against such actions. Several companies can attest to the reality that a data breach can cost a company tens of millions of dollars, or in some cases even end hundreds of millions of dollars.
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As far as what features these policies include, that would be coverage for third party exposures, breach expense and extortion threat coverage, media liability coverage, business interruption coverage, access to the eRiskHub and more. Berkshire Hathaway Specialty Insurance’s quote said:
Our experienced professional liability team is providing solutions to simplify for customers the complex work of managing professional liability and cyber exposures. We are pleased to bring to market comprehensive, flexible coverage, backed by BHSI’s commitment to service and financial strength.
Berkshire Hathaway’s Annual Report for the year ending in 2014 said the following of the BHSI operations:
Ajit’s underwriting skills are unmatched. His mind, moreover, is an idea factory that is always looking for more lines of business he can add to his current assortment. Last year I told you about his formation of Berkshire Hathaway Specialty Insurance (“BHSI”). This initiative took us into commercial insurance, where we were instantly welcomed by both major insurance brokers and corporate risk managers throughout America. Previously, we had written only a few specialized lines of commercial insurance.
BHSI is led by Peter Eastwood, an experienced underwriter who is widely respected in the insurance world. During 2014, Peter expanded his talented group, moving into both international business and new lines of insurance. We repeat last year’s prediction that BHSI will be a major asset for Berkshire, one that will generate volume in the billions within a few years.
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