By Michael Rogers
Most businesses have some kind of online presence or database that creates the potential for liability. It is essential that insurance agents protect their financial stability by having insurance to cover the potential dangers that can spring from their online exposure. Consider the fact that every record lost during a data breach costs a company between $150 and $188, according to Symantec and IBM-Penemon research. Multiply that amount by the number of clients you have, and you can get an idea of what you are facing.
What is a data breach?
A data breach is a situation in which confidential information is leaked. If your business experiences a data breach, you will have to cover the various expenses associated with it, including rebuilding your tarnished reputation.
Any business that deals with sensitive data makes an attractive target for cybercriminals. Life and health insurance agents and brokers along with financial planners handle a great deal of sensitive financial information. If your company is like many other businesses, you lack any kind of system for protecting all that data. Keep in mind that the cost of a data breach can be significant and you may be paying it for a very long time.
Below are a few scenarios in which you might be liable:
- One of your employees posts defamatory content on your company website in which they slander another company.
- One of your employees infringes on copyrighted material in content on your company website.
- Your company experiences a data breach and fails to notify the clients whose data has been compromised.
- A lost or stolen smartphone or laptop results in data being compromised.
- Your clients' computers have been infected by a virus that was passed on to them via your network.
Benefits of cyber liability insurance
Cyber liability insurance cannot keep bad things from happening. But it can keep bad events from turning into worst-case scenarios that lead to the demise of your business. An insurance agent or broker who specializes in this coverage can provide you with more details, but here are some general ways that cyber liability insurance can benefit your business.
It can cover lawsuit costs. Consider the fact that lawsuits can be filed in any situation in which you are dealing with other people’s money. If your clients have lost money as a result of a cyber attack on your business, they may sue. You face a significant likelihood of being sued even if their claim is baseless. Even if you win, you will still have to pay for your defense and spend time defending yourself against the claim. A lawsuit can be highly disruptive to your business. Along with those expeses, the underwriting risk will increase along with the cost of your insurance.
It covers cyber extortion. In this type of cyber attack, hackers hold data hostage until their demands are met. Usually, they will demand a ransom. Cyber liability insurance can pay the ransom, thus allowing you to get your data.
It pays for customer notification. It can be expensive to send emails or letters to all your clients who have had their information compromised in a data breach. If you have cyber liability insurance, it can help to cover the costs associated with notifying them.
It pays for credit monitoring. If you have been the victim of a cyber attack, you will need to invest in damage control. Credit monitoring will be a big part of this. You will have to do this in order to rebuild your reputation with your clients. Cyber liability insurance will cover credit monitoring services, which can help you to regain your clients’ trust. Your state may require you to do this anyway, but even if it is not legally mandated where you are, it is still a good idea to make credit monitoring available.
What is the risk level for life/health insurance agents and financial planners?
You may think that your risk as an insurance agent or financial planner is low. But it is important to note that 71 percent of cyber attacks are perpetrated on businesses that have fewer than 100 employees. Cyber criminals are aware that smaller businesses are likely to be without the resources needed to defend against hacking attacks effectively. They depend on the fact that your security system may be weak or nonexistent. Of course, a larger corporation will have much more information that will be more profitable for a hacker to steal; however, they are also likely to invest millions in sophisticated security systems.
All businesses face a certain amount of risk, whether that risk comes from fires, floods or data breaches. As an insurance agent or financial planner, you are well aware of the many financial dangers out there. The fact that you deal with both confidential data and large amounts of money exposes you to some of those risks. Being aware of your risks is your first step toward lowering their potential for causing serious financial loss.