What do Art and Cyber Insurance have in common?

Art Insurance and Cyber Insurance are not often mentioned together. This is, perhaps, because of their subject matter; cyber insurance covers against intangible and ethereal threats, while art insurance protects against the loss of extremely tangible, physical, real-world assets.

While both Art and Cyber Insurance are, indeed, types of insurance, and will provide remedy to the policyholder in the event of a loss, for many laypeople that should be the extent of their relationship. However, there is a much more fundamental relationship between these two types of insurance policy, and this connection impacts how, when, and why a person or organization would consider the purchase of either of these two forms of insurance.

First things first.

Before we jump into an explanation as to how Cyber and Art insurance are related, it is important for us to understand exactly what we are talking about.

What is Art Insurance?

“Art insurance” is actually an umbrella term used for a wide range of differing insurance policies designed to protect physical assets you own. Whether this is a home contents insurance policy, a stand-alone art insurance plan, or even corporate collections coverage for a gallery or museum, the principle is essentially the same; should your art (or collection) be stolen or accidentally damaged you will be compensated.

There are various levels of protection, and within the art insurance world almost an infinite number of options available to a policyholder for customization of their coverage.

What is Cyber Insurance?

Cyber Insurance is designed to assist individuals and businesses recover in the wake of a cyber-attack. Whether a company has been the victim of phishing, DDoS, malware, or even ransomware, Cyber Insurance will provide the financial resources and assistance needed to overcome the claim event and continue business operations without interruption.

Cyber insurance is not an indemnity product, and does not cover your business against the risk of producing faulty software or code. However, should your organization fall victim to cyber criminals, this form of insurance ensures that the crime will not be the end of the company.

How are they connected?

If you have been paying attention to the news you will have noticed an increase in the number of high-profile cyber-attacks hitting successful corporations over the last few months. Most recently, on June 11 2021, McDonalds Corporation fell victim to cyber criminals who stole data from the company in South Korea and the USA. As a consequence of this, Cyber Crime has become a major topic of interest and Cyber Criminals have been giving interviews on their activities. On March 16 2021 TheRecord.Media published an interview with a leading cyber crime syndicate – REvil.

This interview was interesting for a number of reasons, as the hacker provides the entire operational agenda for the syndicate. Even to the point of revealing how the attackers scout for targets.

The fact that cyber criminals are using insurance policy lists to determine which companies to target for an attack is definitely concerning, but it is not unusual. This situation has existed for a long time in the art world, and is the primary reason for many art collectors not insuring their collection.

Art is often not insured

Art collectors have, for decades, understood the risk of insuring their collections for precisely this reason – for expensive and valuable works of art, having the piece insured often means exposing yourself to the possibility of theft. It is a perverse inversion of the concept of insurance in that individuals are choosing not to obtain insurance, because of the risk presented by taking out cover.

As long as art has existed in the world, someone has always been trying to steal it. This is primarily because art is mobile, expensive, and desirable; criminals are attracted to art because of its relative simplicity – a lot of art is located in private residences without the best security in the world. Because art is expensive, people generally want to insure it. However, this leaves an opening for criminals who have historically targeted lax practices at insurance underwriters to get information on desirable victims for art heists.

This has led to a paradox where the owners of valuable artworks, especially in certain parts of the world like South East Asia, do not obtain insurance on their collections. By not obtaining insurance these owners believe that they will not be exposing themselves to criminals – the art is private and is stored safely at home. These owners are under the erroneous belief that not purchasing insurance they will leave no record of the location of the art, or the fact that they are the owner, and will avoid being targeted by Art thieves.

Some protection is always better than none

A similar situation is starting to appear in the Cyber insurance world – businesses are choosing not to obtain insurance under the belief that doing so will attract the attention of Cyber Criminals who, in many cases, have already gained access to the insurer’s client records and computer networks.

The hackers themselves have stated that they intentionally look for organizations with existing cyber insurance protection when planning a cyber-attack, so this point of view is not unwarranted. Why expose yourself to extra risk by planting a big flag in your office that says “please hack me!”

But here’s the thing, even without Cyber Insurance you can still be the victim of a cyber-attack. Just as you can still be the victim of a burglary without obtaining home contents insurance or art insurance protection.

Not having the insurance means that you’re not on the insurance company’s policy lists and so criminals won’t be able to identify you, or target you, in that way but there are still other methods. From press releases announcing financial results, to interviews with CEOs on new product and service initiatives, there are a plethora of methods that criminals can use to identify a “good target.” This also ignores the targets of convenience – those organizations where an employee just happened to click on the wrong email link, or gave information they shouldn’t to the nice caller on the phone.

Not obtaining Cyber Insurance because you are worried about exposing yourself to criminals when they hack the insurance company is akin to cutting off your nose to spite your face. If a Cyber Event does happen to your company (and the odds are extremely good that it will), then without cyber insurance you will be responsible for the financial fallout. Just as owners of stolen art who do not have insurance would be responsible for the costs of replacement or restoration.

For more information or to get a free quote for an Art or Cyber insurance policy in Hong Kong, please contact us today.