LONDON (16 May, 2018) – Aon (NYSE:AON) and DLA Piper have launched a guide ‘The price of data security’, ahead of the General Data Protection Regulation (GDPR), effective from 25 May 2018.
The guide reviews the insurability of GDPR fines across Europe, which can reach up to €20 million or, if higher, up to 4% of a group's annual global turnover. It also looks at insurability of costs associated with GDPR non-compliance (e.g. litigation, investigation and compensation), as well as the insurability of non-GDPR regulatory fines.
The guide highlights that there are currently only a few jurisdictions in Europe where civil fines can be covered by insurance and, even then, there must be no deliberate wrongdoing or gross negligence on the part of the insured. Criminal penalties are almost never insurable. GDPR administrative fines are civil in nature, but the GDPR also allows European Member States to impose their own penalties for personal data violations.
Key findings include:
Whilst the insurability of GDPR fines may be limited, insurance forms a key component of an organisation’s risk management strategy to manage costs associated with GDPR non-compliance and resulting business disruption losses. Such costs could include legal fees and litigation, regulatory investigation, remediation and other costs associated with compensation and notification to impacted data subjects.
Vanessa Leemans, Chief Commercial Officer, Aon Cyber Solutions EMEA commented:
“GDPR will expose organisations to significantly higher risks related to how they manage and store personal data. Data breaches, and other cyber events, could see businesses face both major fines and extensive costs. It is therefore essential that organisations fully understand where their exposures lie. They should work closely with their insurance partners to ensure they have an appropriate risk transfer solution and incident response plan in place.”
Organisations may also face damage to both their reputation and market position if impacted by a high-profile data breach.
Prakash (PK) Paran, Partner and Co-Chair, Global Insurance Sector at DLA Piper added:
"While there are only a few jurisdictions where GDPR fines are insurable, insurance against legal costs and liabilities following a data breach is widely available across Europe and may provide valuable cover to organisations. However, corporate groups still need to consider reputational damage and impact on existing customers, the wider market, and their relationships with regulators, all of which may go beyond quantifiable financial losses. Prevention is better than the cure."
To download the full report ‘The price of data security: A guide to the insurability of GDPR fines across Europe’ please visit Aon’s website.
Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.
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