[cabfpub] Ballot 121 (insurance)

Ben Wilson ben at digicert.com
Tue Jun 3 01:43:09 UTC 2014

Thanks, Moudrick, Kirk and Iñigo,

For those who haven't looked up this ETSI document, Section 7.5 says, 
"(d) Adequate arrangements to cover liabilities arising from its 
operations and/or activities; (e) Financial stability and resources 
required to operate in conformity with this policy; and (f) Policies and 
procedures for the resolution of complaints and disputes received from 
customers or other parties about the provisioning of electronic trust 
services."  This appears to be based, somewhat, on the liability 
structure set up in Art.6  of of EU Directive 1999/93/EC and subsection 
(h) of Annex II, 
http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:31999L0093, the 
latter of which reads, "(h) maintain sufficient financial resources to 
operate in conformity with the requirements laid down in the Directive, 
in particular to bear the risk of liability for damages, for example, by 
obtaining appropriate insurance;"

CAs are supposed to address their responsibility under Art. 6.  This can 
be written in their CP/CPS either under Section 2.3 (RFC 2527) or 
Section 9.2 (RFC 3647) -- maybe more explicit requirements in the BRs 
are needed about what must be written in those sections?  Also, I see 
that "risk" is noted in Annex II, but not in section 7.5 (too hard to 
audit?), an insurance or financial stability requirement is a much 
easier way to address risks to third parties than other methods, and it 
more fairly distributes the loss potential.  See e.g. 

According to 

most EU countries have simply copied this text from Annex II into their 
own laws without further requirements.  However, some, like Spain, have 
set forth specific insurance amounts for " Cobertura de seguro u otras 
garantías para los terceros de buena fe cuando incumpla las obligaciones 
que impone la Ley 59/2003, de 19 de diciembre, de Firma Electrónica" - 
from what I can tell, the amount is 3 million Euros. 
http://www.boe.es/boe/dias/2003/12/20/pdfs/A45329-45343.pdf   So, in 
order to be more fair to non-US CAs, what about that 3-million-Euro 
amount instead that just said "third party cyber coverage"?  (I have 
Betterley's 2014 Cyber Insurance Report that I can use to create a 
definition of "third party cyber coverage".)   Given the facts above, I 
can't see any reason to replace our objective rule with something as 
subjective as "adequate arrangements" or "sufficient financial 
resources," which are subjective and impossible to audit, let alone 
eliminate it altogether.

Financial stability is a key component of being a CA, especially one 
that issues Extended Validation certificates.  It certainly seems that 
any European CA wanting to issue the "qualified website" equivalent of 
an EV certificate will have to meet Art 6 / Annex II requirements in any 

Also, we require insurance for banks and automobile owners/drivers. Not 
for first-party coverage, but for third-party coverage--we do not want 
innocent third parties left holding the bag--it's what economists call 
"negative externality".   Banks, for example, have great security, but 
they also have to handle the risk that all of that security won't 
protect against everything--nothing works perfectly 100%.  Banks are 
required by regulators to have financial reserves, deposit insurance, 
and other risk-mitigating processes. See 
http://edoc.ub.uni-muenchen.de/5628/1/Mikkonen_Katri.pdf   Under the EU 
Directive on capital adequacy of investment ?firms and credit 
institutions, this means coverage of EUR 20 000 for each depositor, 
minimum start-up-capital of EUR 5 million, and then ongoing solvency 
ratios per Basel requirements.


On 6/2/2014 1:40 AM, i-barreira at izenpe.net wrote:
> Hi,
> The TS 102 042 is the one for EV and BR certs and also indicates in 
> 7.5 what Mou has stated.
> This "control" was included to let the CA to set the requirements 
> appropriate to its needs and according to national legislation.
> Regards
> *Iñigo Barreira*
> Responsable del Área técnica
> i-barreira at izenpe.net <mailto:i-barreira at izenpe.net>
> 945067705
> Descripción: cid:image001.png at 01CE3152.B4804EB0
> ERNE! Baliteke mezu honen zatiren bat edo mezu osoa legez babestuta 
> egotea. Mezua badu bere hartzailea. Okerreko helbidera heldu bada 
> (helbidea gaizki idatzi, transmisioak huts egin) eman abisu igorleari, 
> korreo honi erantzuna. KONTUZ!
> ATENCION! Este mensaje contiene informacion privilegiada o 
> confidencial a la que solo tiene derecho a acceder el destinatario. Si 
> usted lo recibe por error le agradeceriamos que no hiciera uso de la 
> informacion y que se pusiese en contacto con el remitente.
> *De:*public-bounces at cabforum.org [mailto:public-bounces at cabforum.org] 
> *En nombre de *Moudrick M. Dadashov
> *Enviado el:* sábado, 31 de mayo de 2014 2:30
> *Para:* ben at digicert.com; kirk_hall at trendmicro.com; 'Gervase Markham'; 
> 'public >> CABFPub'
> *Asunto:* Re: [cabfpub] Ballot 121 (insurance)
> On 5/31/2014 2:46 AM, Ben Wilson wrote:
>     Do you have a proposal that addresses the concerns about financial
>     stability?
> Please see ETSI TS 101 456 V1.4.3 section 7.5 specifically points d), 
> e) and f) - IMO they are close to what you are looking for.
> As a standardization body ETSI doesn't set its requirements in terms 
> of absolute amounts, this is left to implementers - in this case to MS 
> Governments.
> FYI:
> http://www.etsi.org/deliver/etsi_ts/101400_101499/101456/01.04.03_60/ts_101456v010403p.pdf
> Given the fact that EVG is incorporated into ETSI "as is", I see 
> potential conflict between the two approaches.
> Thanks.
> M.D.
> -----Original Message-----
> From:kirk_hall at trendmicro.com  <mailto:kirk_hall at trendmicro.com>  [mailto:kirk_hall at trendmicro.com]
> Sent: Friday, May 30, 2014 5:20 PM
> To:ben at digicert.com  <mailto:ben at digicert.com>; 'Gervase Markham'; 'public >> CABFPub'
> Subject: RE: [cabfpub] Ballot 121 (insurance)
> Ben -- as I indicated to the EV Working Group in an email recently, I have
> definitely changed my mind about the EVGL insurance requirement based on my
> own experience in starting AffirmTrust in 2010.  (As a reminder to all,
> AffirmTrust was acquired by Trend Micro in 2011, and Trend is big enough and
> has a strong enough balance sheet and treasury that under the EVGL we are
> entirely exempt from the insurance requirements -- so we have no personal
> stake in this.)
> While starting my own company, the insurance brokers kept asking me why I
> wanted the insurance coverages -- they clearly didn't think I needed them --
> and they warned me that the E&O coverage in particular probably wasn't going
> to provide me with any meaningful protection for anything (given that it
> generally doesn't cover contractual liability for a bad cert, return of
> fees, etc.)  So it felt like a very big waste of money.
> Plus we now know from eight years of experience (plus the anecdotal evidence
> of Trend Micro's legal counsel from his decade at VeriSign) that there
> simply aren't claims from customers or relying parties for mis-issued certs
> and that the need for insurance (even if it did cover the mis-issuance of EV
> certs) is minimal at best.  The one case of catastrophic failure and breach,
> DigiNotar, apparently resulted in a court ruling that the insurer would be
> allowed to deny all coverage.
> When we collectively were brainstorming in 2005-6 to create the first EV
> Guidelines, we were trying to come up with lots and lots of requirements to
> try to set EV certs apart from other certs.  As I recall, we considered even
> more complex verification steps for EV to make it similar to the closing of
> a major corporate transaction (e.g., getting Board of Directors
> authorizations, Secretary's Certificates, etc.) -- fortunately, common sense
> prevailed and we slimmed down the requirements so they are very thorough,
> but achievable.
> Finally, the Forum has learned through eight years of experience that these
> insurance requirements are even harder and more expensive for
> non-US/Canadian CAs to satisfy, and that their brokers also tell them the
> coverages won't provide them with any meaningful protection.  We don't want
> the EV Guidelines to be weighted in favor of US/Canadian CAs.
> The Forum hasn't hesitated from changing other EVGL requirements when we
> think justified -- such as recently allowing the use of the automatic email
> verification method to upgrade domains to the EV level (using the same
> verification methods as for DV and OV certs).  For the first seven years of
> the EVGL, we were all required to do manual vetting of domains with a WhoIs
> lookup and deal with any mis-match of the registration.
> So for all these reasons, I think Gerv is right and it's time to drop the
> insurance requirements.   Let CAs follow any insurance requirements that
> their applicable local jurisdiction(s) may impose, but otherwise don't
> create an additional insurance requirement through the EV Guidelines.
> Gerv, thanks for sharing your thoughtful and well informed opinion.  It
> really helps.
> Kirk
> -----Original Message-----
> From:public-bounces at cabforum.org  <mailto:public-bounces at cabforum.org>  [mailto:public-bounces at cabforum.org] On
> Behalf Of Ben Wilson
> Sent: Friday, May 30, 2014 3:15 PM
> To: 'Gervase Markham'; 'public >> CABFPub'
> Subject: Re: [cabfpub] Ballot 121 (insurance)
> Gerv and all,
> If people want to save money, they can stick to issuing DV or OV
> certificates.  EV certificates need to remain different, and this proposed
> move is contrary to the first goal we all agreed upon when we began working
> on the guidelines for issuing Extended Validation Certificates, which my
> notes indicates was to "increase online trust."
> If the ballot is re-introduced and passes, then CAs will not be required to
> have insurance for any negligence in issuing or maintaining EV Certificates.
> It increases the likelihood that another Diginotar won't be held
> accountable, and I believe the insurance is currently available at
> affordable cost, approximately $10,000 per $1 million coverage.  I have
> attached a sample cyber-insurance policy, which is available in similar form
> from any of top insurers internationally-- Zurich, ING, AIG, AXA, Allianz,
> etc.
> The reintroduction of Ballot 121 also reopens negotiations of 8 years ago,
> which took place during 2006.  For example, attached is Kirk Hall's memo to
> the group from June 2006 in which he recommends "indemnity insurance
> coverage (e.g. "errors and omissions," "cyber coverage," "network computer
> liability," "professional liability," or other similar coverage) for
> Extended Validation Certificates [in the amount of $10 million]."
> Opponents of insurance requirements cannot simply erase these historical
> choices without proposing viable alternatives.  (It's always easier to
> complain and to poke holes at things than to work on real solutions.)  And
> finally, if the EV Guidelines do not contain some form of financial
> responsibility, then we might as well delete the Section 7 warranties, and
> the other EV provisions to which they refer, because they will just become
> empty promises.
> Ben
> -----Original Message-----
> From:public-bounces at cabforum.org  <mailto:public-bounces at cabforum.org>  [mailto:public-bounces at cabforum.org] On
> Behalf Of Gervase Markham
> Sent: Friday, May 30, 2014 12:41 PM
> To: public >> CABFPub
> Subject: [cabfpub] Ballot 121 (insurance)
> I talked to our lawyer this morning. Mozilla is now willing to support the
> proposal in Ballot 121 (removal of the insurance requirement from the EV
> Guidelines).
> We feel that this requirement provides no significant protection in practice
> for either users, for whom CAs can limit liability to $2000 anyway, or for
> browsers, for whom clause 18.2 which indemnifies them is much more relevant.
> We encourage other CAs and browsers to support this ballot also, and let the
> CAs put the $N,000 saved towards making their products better and/or cheaper
> for users.
> Gerv
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