Spurred by the rash of high-profile hacks, companies are purchasing cyber-insurance to protect themselves from the financial liability associated with data loss and business disruption. But the still-maturing market for cyber-insurance remains fraught with loopholes and inconsistencies, and suffers from a shortage of qualified staff who can properly assess cybersecurity profiles, experts and CIOs say."The application process is less than what you would think it would be, in terms of the due diligence," says Shawn Wiora, CIO and CISO of Creative Solutions in Healthcare, a nursing care facility provider. "I like to work with strong partners and, at this point, I'm not sure that a lot of [the insurers] know what they're doing." Shawn Wiora, CIO and CISO at Creative Solutions in Healthcare.Companies, fearing the deleterious impact of hacks at Target, Anthem, Sony and dozens of other companies, are overhauling IT systems and processes, adding analytics to detect threats, hiring CISOs and implementing programs to better educate employees about dangers. A company's worst nightmare is the loss of customer data to hackers, the costs of which can be financially steep and potentially catastrophic to the brand reputation. Cyber-insurance is intended to hedge against those risks.Selecting cyber-insurance is its own challengeAccording to a survey conducted by Veracode and NYSE, 91 percent of 276 companies said they'd purchased cyber-insurance covering business interruption and data restoration, with 54 percent indicating they had also purchased coverage for expense reimbursement in the case PCI fines, breach remediation and extortion, for example. Some 52 percent of companies are purchasing coverage in the event of data stolen by employees. And 35 percent are seeking coverage against loss of sensitive data caused by software coding and human errors.[ Related: Cyber insurance: Buy, but be aware ]While the need for the insurance may be clear, obtaining coverage can be a frustrating experience. It certainly was for Wiora, who is close to picking a new cyber-insurance policy after several months of shopping. He was surprised by the lack of due diligence some insurers exhibit as they evaluate prospective customers for coverage. Cyber insurers typically require potential clients to complete lengthy questionnaires, often ranging from 150 to 300 questions, designed to determine whether they use encryption, as well as how their firewalls and password authentications are set up.[ Related: Corporate culture hinders cyber insurance buy-in ]However, some questionnaires are so spartan as to court risk. Wiora says that one company's questionnaire asked the following: "Do you ensure that all wireless networks have protected access?" He says he could simply write "yes," to satisfy the blanket question. It did not take into account how many locations he had or ask for additional information on the matter. And rather than come to his company to inspect the cyber-set up for themselves, they simply vetted everything with Wiora via the phone.After some of these calls, Wiora says, it became clear that insurers have little awareness of cybersecurity terminology, let alone risks. If he picked an insurance provider with lax practices and suffered a breach, he believes he'd get mired in litigation as the parties debated coverage particulars. "I think there are a lot of problems with this," he says.[ Related: 5 things you should know about cyber insurance ]Chris Wysopal, CTO of application security vendor Veracode, has heard similar things from clients. He noted that while insurers require building owners to undergo regular inspections to obtain occupancy permits, insurers can provide cyber coverage with a wing and a prayer. "There isn't that inspection where you can say they're at a level where we can feel safe insuring them," Wysopal says.Talent dearth heightens cyber-insurance challenges Part of the problem is that the industry lacks the requisite talent to inspect a company\u2019s IT systems and processes to accurately provide price quotes. The world is strapped for cyber-talent, and most of the best are employed by large corporations, where they're paid handsomely to shore up corporate defenses. "Everything from the application process, to the vetting is mired [in inconsistency]," Wiora lamented. "And when you do [as an insurance client] have to file a claim, what company has people with experience in terms of cyber-insurance claim remuneration?" Joseph Magrady, CIO at Vertafore.[ Related: Assessing the value of cyber-insurance ]Wysopal says such vetting will become more stringent as a progression of costly hacks force industry definitions for due care and reasonable security evolve. Cases such as the Wyndham Worldwide hack, in which the hotel chain had to pay out more than $10 million to cover fraudulent charges racked up on consumers' credit and debit cards, will help shape the debate about reasonable security, he says. "Court cases are the ultimate arbiters that others in the industry will feed off of," Wysopal says. "If you don't have a reasonable security program insurers are not going to pay out."Purchasing cyber-insurance isn't the purview of every CIO, but bolstering cybersecurity defenses almost certainly is. Joseph Magrady, who joined Vertafore as CIO from American Express in August, plans to use Hadoop analytics to parse the network for anomalous events. He's also improving education programs for employees and customers, including social engineering testing to see whether employees fall for faux phishing scams. He says education is every bit as important as implementing the right technical defenses to strengthen the overall security posture. "It's not just your technology\u2026 it\u2019s about whether your people are aware and how they behave," Magrady says.