"Philadelphia is really the center of the universe, in cyber insurance," says Nicholas C. Economidis, underwriter for "Information Security and Privacy," also known as "cyber", insurance lines for Lloyds of London insurance syndicate member Beazley Group's U.S. office in Philadelphia.
Next week data-security underwriters from some of the nation's biggest insurers, their lawyers and legal antagonists, and government watchdogs, from Hartford, New York and the other insurance centers, will gather in Philadelphia for the fourth straight year for their Cyber and Data Risk Insurance Conference at the Union League. Economidis is a co-chair, with Robert Parisi of Marsh FinPro in New York.
Economidis takes the long view: "Crime happens in waves," and new classes of crime "are very profitable for the criminal and very low risk, at first. Then society responds and cracks down. That's how it happened with bank robbery, then burglary, then drugs, now ID theft.
"We're just starting to crack down on ID theft and credit card fraud. The problem is, we have a real patchwork of laws in this country," and little central oversight by industry or government. "And it's getting worse," with state passing consumer-notification laws, and the federal government requiring health-data breach reports, and banks continuing to rely on open credit-card systems which invite fraud using basic customer identification numbers.
Which means more opportunity for fraud, and for people who sell systems to combat fraud, and insurance to cover it. "There's lots more demand for expertise," said Economidis. "I'll put my kids through college on this."
Why Philly? The city "has a long history as an insurance center," Economidis notes. After cutbacks at big firms in the 1990s, "a lot of us found our way to professional liability and data security coverage." His own road (from Cherry Hill East and Rutgers) through Cigna, to Zurich North America, and back to Cigna to start a Technology Risk Unit in 1998, before he joined Beazley in 2006. AIG Commercial Insurance also has a Philadelphia-based cyber risk group. (Plus, New York convention venues were full when they planned the first conference four years ago.)
ID and data theft security, once an exotic policy, has become standard coverage. He says the number of clients handled by his office has more than doubled in the past year, while total premium is up 50%. "Bank of America has bought this coverage for years; now large doctors' groups and smaller retailers have been buying the coverage." Economidis and his peers used to spend their days tramping through server farms; now it's a matter of running client data through standard price models.
Philadelphia-based panelists at the conference include Economidis and rival Toby Merrill, vice president for professional risk at Ace USA; FBI Cyber Crim Squad agent John B. Chesson; Brad Gow, senior vice president for Zurich North America Specialties' professional-liability group; Mark Greisiger, of loss-control specialist NetDiligence; insurance defense lawyer John F.Mullen Sr. of Nelson Levine de Luca & Horst, and plaintiff lawyer Sherrie R. Savett of Berger & Montague.