E-Commerce and Insurance - The Definitive Guide

On Tuesday I attended an e-commerce insurance book launch by the Insurance Institute of London in the Old Library at Lloyd's of London.

Insurance Aspects of E-Commerce was drafted by members of the Insurance Institute of London (IIL) Research Study Group 256. It's worth pointing out that "e-commerce" here refers to doing business electronically, rather than the narrower concept of online payments i.e. payment by debit and credit cards. The publication has chapters about:

• the effect of IT on the London insurance markets
• brokers' views on e-risks and e-trading initiatives
• security of e-commerce
• experience in underwriting e-risk insurance
• online third party risks
• first party risks
• regulation of online insurance
• the effects of the Electronic Commerce (EC Directive) Regulations 2002
• review of the current London (i.e. UK) market.

So it not only explores the issues and challenges to underwriters of e-commerce insurance (sometimes also referred to as cyber liability, internet liability insurance, online insurance or e-trading insurance), but also the effect of IT on insurance (e.g. streamlining, standardisation and e-trading), the regulatory background, issues of e-trading for insurers and a thorough, yet jargon-free, explanation of the information security issues. The latter correctly highlights that e-commerce security is not just related to technology—it's a combination of technology, people and culture.

The e-risk factors for businesses seeking e-commerce insurance are described and include the organisation's activities, locations, turnover, number of staff and the scale of its online activities such as direct revenue and traffic (e.g. web site visitors numbers). Increasingly the organisation's risk management framework and disaster recovery plans are a consideration in whether insurance can be obtained and what the premium is.

The publication is worth reading by anyone responsible for a transactional web site—regardless if they are seeking any form of cyber insurance—they have ownership, marketing, compliance, governance or information system responsibilities. Perhaps only the 25 pages of Chapter 7 concerning regulation of online insurance would not be of interest to non-insurance readers.

The 170-page A5 book is available from the IIL for £59+postage, with a discount for IIL and Chartered Insurance Institute (CII) members. ISBN 978-0-900493-88-1.