Does Your Agency Need Cyber Liability Insurance?

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Insurance agencies have a unique responsibility to lead by example in avoiding unexpected challenges, including protecting their digital presence.

As a privacy protection professional, can you tell if your work is protected?

Insurance agencies have a unique responsibility to lead by example when it comes to preventing the unexpected, and that includes protecting their digital presence.

Due to the pandemic, many agents and agencies are moving or expanding a large part of their business online. These activities range from requests for quotations to advertising campaigns and may include video conference meetings.

While digital access is easier and easier to record for documentation purposes, it also exposes highly sensitive data to potential theft. For cybercriminals, information shared with insurance companies represents a wealth of information ripe for identity theft—names, birthdays, social security numbers, bank accounts and even medical records.

Why Insurance Agencies Need Cyber Liability Policies

Ethically, your clients rely on the services you provide to protect themselves, their assets, their families, and life insurance, perhaps their estate after death. This requires an extraordinary level of trust from the policyholder – trust that must be earned early and carefully maintained throughout your business relationship.

When customers give us sensitive information about their finances, health, property and loved ones, they expect that information to be safe in your hands. Breaches of trust not only affect agencies that are victims of cybercrime, but often the insurance industry as well.

Much better than others

In fact, no digital system in the world is immune from disruptions and hacking. Malware installed on flash drives can access or compromise systems not connected to the Internet.

Insurance products are sold daily to policyholders who worry that personal expenses such as car accidents and plane crashes are unlikely to be high. Although agencies think they are less likely to be targeted, time and time again no system is truly foolproof.

In 2020, cyber attacks took place against hospitals across the country. A variant of the malware, known as ransomware, demanded payment in cryptocurrency before regaining control of records and cold systems. If an attack on such a large scale were to happen to a good institution like a hospital, it’s not hard to imagine what would happen to insurance agents who would have to set up hotlines.

Weighing risks and rewards

It is not necessarily a “yes” or “no” deal with the agency if the insurance company needs an online insurance policy, but there is a balance. In general, the larger or broader the insurance company, the greater the need for cyber liability coverage.

When cybercriminals choose their targets, they look for one of two characteristics – the ease with which they can break into a system, or the amount of useful information they can gain by doing so. Targeted environments (for example, large companies with large databases) are vulnerable because they are equally susceptible to infection. For small businesses or sole proprietors, an online liability policy may not be worth the price because of their information.

The best way to determine if an online liability policy is right for your office is to talk to your colleagues, especially the insurance company you work for. Networking events and discussion groups with friends are easier when you are a member of an insurance group like Voldico.

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