Heightened SEC Scrutiny Over Cyber Incidents
Public companies are facing increased scrutiny from the Securities and Exchange Commission (SEC) regarding their handling of cyber incidents and disclosure procedures. The SEC has ramped up enforcement efforts following the release of cybersecurity disclosure rules in 2023, including the creation of a Cyber and Emerging Technologies Unit.
“We’ve seen a growing number of SEC enforcement actions tied to how companies handle disclosures related to cyber incidents,” said Meredith Brown, head of U.S. cyber and E&O at QBE North America. Companies must regularly review and refine their cyber incident response plans to ensure compliance with SEC regulations.
Traditional cyber insurance policies often don’t cover SEC regulatory actions as they are typically tied to specific privacy events. As the SEC increases its enforcement activity, more companies are likely to submit claims related to these actions, which may also involve D&O components.
New Coverage Enhancements by QBE North America
To address the growing need for comprehensive cyber insurance, QBE North America has introduced two new coverage enhancements:
- SEC Disclosure Costs Coverage: Covers costs associated with engaging external legal counsel to advise on post-cyberattack compliance with SEC regulations.
- Enhanced SEC Regulatory Coverage: Provides coverage for violations of SEC regulations, addressing a gap in traditional cyber policies that typically only cover privacy-related regulatory violations.
“These enhancements help companies feel confident they have the coverage they need as the SEC’s approach continues to evolve,” Brown explained. The response from brokers has been positive, indicating a strong demand for cyber insurance solutions that better protect public companies.
As organizations adopt new digital tools, their risk exposure grows. The SEC’s focus on emerging technologies like Artificial Intelligence reinforces the need for companies to strengthen their incident response frameworks and ensure proper disclosure of cybersecurity incidents.
To learn more about QBE North America’s cyber insurance solutions, visit: QBE North America Cyber Insurance
