Sony CEO Offers Apology, $1 Million Identity Theft Insurance Policy

It’s been over two weeks since Sony first shut down the PlayStation Network after detecting an external intrusion, and there is still no concrete sign of the system being turned back on any time soon. Many facts have become public since Sony pulled the plug to stop their customers’ personal information being distributed across the internet, and it would be fair to say that the company’s public image has taken a significant beating.

Now Sony is breaking their silence, and doing away with communicating with the affected parties solely through press releases. Sony CEO and President Howard Stringer has offered a formal apology on behalf of himself and the company, and announced that they will be offering US PSN account holders complimentary enrollment in ‘AllClear ID Plus,’ an identity theft protection program offered by Debix, Inc. Along with their own personal cyber-watchdog comes a $1 Million identity theft insurance policy to cover any expenses that may be incurred.

Nobody expected that the PSN outage would last over two weeks, but the fact of the matter is that it will simply take as long as it takes to get the new and improved PSN back up and running. While an address from the head of the company won’t do much to assuage the fears of those already weary of the impending threat of identity theft, or credit card fraud, Stringer’s open letter is as much an appeal to common sense as it is an apology.

In his letter posted to the PlayStation blog, Stringer sympathized with the customers, explaining that the frustration felt by the millions of PSN users is completely justified and a motivating factor for Sony to get the problems sorted out as quickly and cleanly as possible. Message boards across the internet have lit up with users lambasting Sony for their delayed response time, but according to Stringer, the company acted as any responsible company would.

Upon detecting an intrusion, Sony immediately shut down their network, and called in the professionals to find out just what had been exposed to hackers. Was their wording a bit more ambiguous than customers would have liked? Sure. But it certainly wouldn’t do any good to inform users that their credit card numbers had been exposed before Sony was absolutely positive that was the case. And as Stringer once again points out, their analysts still have no proof that credit card information was exposed.

To show their customers just how committed they are to doing everything they can to make things right with their customers, a free month of PlayStation Plus access to all subscribers is just the beginning. Another blog post reveals that in order to guarantee that no customer suffers identity or credit card theft as a result of the PSN breach, Sony is offering to foot the bill for entry into Debix, Inc.’s ‘AllClear ID Plus’ fraud protection service.

As “one of the industry’s most reputable identity protection firms,” Debix, Inc.’s security programs and on-call investigators will be provided free of charge to all US PSN and Qriocity account holders for a span of 12 months. E-mails informing customers of the offer will be sent out over the next few days, including a coupon code that can be redeemed through Debix, Inc.’s website until June 18.

Along with your very own internet sleuth comes a $1 Million insurance policy per user, intended to cover all possible court fees, lost wages, and other costs incurred as a result of identity theft. While this should go a long way in letting US customers breathe a sigh of relief, PSN customers located outside of the United States will have to wait as Sony attempts to arrange similar coverage.

No word yet on whether additional coverage will be offered to the 900 users whose credit card numbers were accessed via SOE‘s database, but from Sony’s wording and response, we should expect an explanation within the next few days.

It’s going to be hard for those Sony-haters out there to argue that the company isn’t doing everything it can to make up for their customers’ information being broken into. It’s difficult to think that other websites or companies would go to such extensive lengths to put fears at ease, and cover the costs for all users.

It’s easy to vilify a large corporation, and imagine that Sony being hacked was a result of security protocols that were lacking or outdated. But in his apology, Stringer is careful to remind us all that all of this mess started because a group of criminals illegally entered their systems, and intentionally gained access to customer data. If you want to get mad at anyone, it’s a lot easier to blame the criminals who will gain from their intrusion than the company bending over backwards to make sure their users are protected.

Insurance nightmare

Worst property insurance idea of the year: Gov. Rick Scott’s reported plan to eliminate or shrink Citizens Property Insurance by leaving its 1.3 million policyholders at the mercy of a problematic private market and the unregulated “surplus lines” market where the sky’s the limit on premiums.

Over the weekend, a report in the Sarasota Herald-Tribune that was compiled from multiple documents and sources said the current Citizens bill in the Legislature originated with a notion by the Governor’s Office to completely phase out Citizens. This week, Brian Burgess, Scott’s spokesman, said the governor never supported that plan.

If this is what the governor ever had in mind, he’s smart to back away. The bill under consideration in the Legislature is bad enough, but drastically shrinking or eliminating Citizens at this time would be a disaster for Florida residents and businesses.

The report said even insurance industry lobbyists at a secret meeting with the governor’s staff in February were appalled because the private insurance market can’t absorb policies from those million-plus Citizens policyholders. The only option for many beleaguered consumers would be the surplus lines market, where rates are unregulated and not backed by a state guarantee fund.

A frustrated Sen. Mike Fasano, Republican of New Port Richey, called the governor “clueless” regarding the plight of policyholders who every year must face steeply rising windstorm insurance costs far out of line with inflation, not to mention salaries and incomes.

In the Senate, SB 1714, sponsored by Sen. Alan Hays, R-Umatilla, would increase rates for customers of Citizens up to 25 percent a year and force some policyholders out of the program. A House version caps the increases at 15 percent. The current limit is “only” 10 percent, and there’s talk of a compromise at 20 percent. That may be Tallahassee’s idea of a compromise; from the standpoint of policyholders, it’s price gouging.

Supporters of rate increases say Citizens has gotten far too big and, in case of a hurricane disaster, would leave every insurance consumer in Florida holding the bag for billions of dollars in claims that the state insurer must repay by adding new surcharges to future policies for years to come. That’s on top of existing surcharges for previous years of disastrous storms.

Shrinking Citizens is a worthy goal, but simply putting the monkey on the backs of policyholders is the wrong approach. Meanwhile, the private market has significant problems that the Legislature is ignoring. Citizens was created because the private market won’t touch vast areas of the state. Making Citizens less competitive with private insurance by raising rates serves only to punish policyholders who can’t get coverage elsewhere. Insurance companies don’t want their business to begin with.

The state has relaxed regulation to lure private companies into the market, but many of them cover billions of dollars of property but have only a few million dollars in the bank. In 2009, Florida led the nation with six property insurance companies going bust, even though the state has not suffered a serious hurricane hit in several years.

Unlike big companies like, say, Allstate and State Farm, companies with inadequate reserves are making hay while the sun shines — raking in premiums while there’s no disaster — but will be unable to withstand the flood of claims that accompany a big hurricane.

That’s where the focus of state lawmakers should be, along with other shortcomings in the market. Gov. Scott said during his campaign that he wanted to return Citizens to its original mission of being the insurer of last resort, instead of being the No. 1 insurer in the state. Good, but any proposal that allows price gouging is not a plan. It’s an insult.

Car insurance premiums soar by 40%

Car insurance premiums have soared by a record 40% during the past year as high levels of fraud and personal injury claims continue to push up the cost of cover, research shows.

The average cost of a comprehensive policy, based on the three most competitive quotes available, reached 892 at the end of March, 40.1% more than a year earlier and the biggest annual rise recorded by the AA since it started the index in 1994.

Younger drivers continued to bear the brunt of the increases, with the cost of comprehensive cover for motorists aged between 17 and 22 jumping by 64% to average 2,431, rising to 3,052 for young men.

The biggest hike was to third party, fire and theft cover, policies that are often taken out by young drivers who cannot afford comprehensive cover, with premiums soaring by 82.1% to 1,533 as insurers continued to exit the sector, reducing competition.

The AA said the main factors pushing up the cost of motor insurance continued to be high levels of fraud and expensive personal injury claims.

The group said despite the number of collisions on UK roads falling, the number of claims for whiplash injuries continued to rise, with more than 200 claims submitted a day, often for accidents that happened up to three years ago, when no mention of injuries was made at the time.

But it added that recent proposals by Lord Chancellor Kenneth Clarke to curb the costs associated with "no-win, no-fee" claims should help to improve the situation if they become law.

Simon Douglas, director of AA Insurance, said: "The record rises in fuel costs coupled with spiralling car insurance premiums is disappointing news and is making driving unaffordable for many, especially cash-strapped young drivers."

He added that although motor insurance premiums had risen by 5.9% during the first three months of 2011, a period during which the cost of cover is normally static, increases for the rest of the year were likely to be smaller, and price hikes for the whole of 2011 were unlikely to exceed 20%.

But the Association of British Insurers warned that unless action was taken to curb the cost of personal injury claims, motor insurance premiums would continue to rise.