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Computerworld - Counterpane Internet Security Inc. in San Jose announced this week that its clients will be able to purchase up to $100 million in insurance coverage to protect against loss of revenue and information assets caused by Internet and e-commerce security breaches.

Counterpane's standard warranty of service will be backed by Lloyd's of London and underwritten by insurance brokers Frank Crystal & Co. in New York and London-based digital risk solution provider SafeOnline.

Some insurers have offered policies that pay for security-related losses under loss-of-business or act-of-vandalism clauses, but these damages can be difficult to collect and often carry premiums that start at $100,000. Counterpane said it is the first security services provider to offer guaranteed, direct financial reimbursement for security-related losses at lower premiums.

David Tapper, a research analyst at Framingham, Mass.-based International Data Corp. (IDC), noted that a number of Counterpane's competitors, including Internet Security Systems Inc. (ISS), Hewlett-Packard Co. and IBM, have also recently formed partnerships with insurance companies. Tapper said this trend has helped push the creation of insurable models of security management that demonstrate risk reduction.

			Counterpane's insurance offerings Internet Asset and Income Protection Coverage provides insurance for loss of or damage to information assets such as data, customer lists, credit-card numbers, budgets, proposals and other digital information resulting from a breach of security or technology failure. The insurance also covers business interruption due to loss of use. Annual premium costs for up to $1 million in losses vary from $12,000 to $20,000 depending on the size of the company and rise to $75,000 for $10 million in losses. Coverage for up to $100 million in losses can be negotiated with Lloyds. Internet Asset and Income Protection Warranty Plan is a turn-key, insurance-backed warranty plan that lets Counterpane's clients extend the Internet Asset and Income Protection Coverage to their customers.

"It will pressure the service providers to make sure that their systems meet certain security standards," said Tapper. "And it will give an incentive for them to provide higher levels of customer service and provide some assurance for customers."

Lloyd's security insurance covers the cost of repairing and replacing data or software following the destruction or corruption of electronic devices from an attack. It also covers lost revenue following a service interruption or service impairment caused by malicious hackers.

Extortion protection, which covers the cost of a specialist's assistance in a security crisis and any subsequent negotiation, including payment of a ransom demand, is also part of the package.

"Until now, the insurance industry has not had