Saikali Quoted on Potential Tax Credit for Data Breach Insurance

Shook, Hardy & Bacon Data Security and Privacy group leader Al Saikali discusses challenges with a plan to potentially give companies that purchase data breach insurance a tax credit in a September 20 Law360 article, “Data Security Gets New Look with Insurance Tax Credit Bill.”

The Data Breach Insurance Act proposes giving companies a 15 percent tax credit if they purchase data breach insurance coverage and adopt the National Institute of Standard and Technology’s voluntary cybersecurity framework. The bill aims to encourage rather than require strong safeguards. While some attorneys see benefits to the bill, Saikali questions its effectiveness, “The bill is so bare that it leaves a number of important questions unanswered, [including] how will compliance with NIST or any other standard be determined and enforced.”

Saikali further explains, “Compliance with NIST or any other standard is going to be based on a snapshot in time, so a company could go out of compliance one month or one day after an audit is completed, yet they would still have the benefit of the tax credit.”