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Cyber/Technology Liability

Network Security and Privacy Liability

Cyber Liability is a constantly evolving risk for every business today. Over the last several years, cyber liability insurance has grown from coverage designed solely for information technology companies to coverage that applies to all industries. Any business that has any form of personal information of their customers or employees (whether in electronic or paper/non-electronic format) has cyber exposure and is at risk.  If your employees have company cellphones or laptops, you have exposure.

States are reacting swiftly to data breach issues with sweeping legislation affecting almost all businesses.  Recently enacted laws require notification to all customers affected by a breach, even if their information has not been used maliciously.  In most cases, the notification also requires an option of one year credit monitoring services and a new card or account number for each customer. Costs can be as much as $250 for each individual affected by the breach.

At ECC, we have Brokers specializing in cyber liability (also known as Data Breach Coverage) with numerous years of experience in underwriting, direct retail sale and wholesale brokerage.  These specialists enable us to offer reliable protection to a broad range of professionals which can protect them from all kinds of cyber threats.  The experts at ECC are ready to extend their services to help you analyze and secure the best possible coverage to fit your client’s firm and protect your company.

Common Sources of Cyber Claims

  • Unauthorized access/use of a company’s network
  • Denial of Service attacks
  • Receipt or transmission of malicious codes (i.e. viruses, malware, spyware)
  • Physical theft/loss of hardware (including laptops, mobile devices, iPads, etc)
  • Any failure to protect, unintentional release, failure to handle/store confidential information of customers, consumers and employees

Eligible Risks

Every class of business has this exposure/liability. The more hazardous sectors include:

  • Retailers/Hospitality
  • Educational Institutions
  • Financial Institutions
  • Healthcare
  • Public/Governmental Entities
  • Law Firms
  • Payment Processors

Claim Examples

A manufacturer received a call and an email from someone whom they thought represented their bank, asking for a verification of funds request. The CFO provided the information and, $75,000 was removed from their account. The cyber thief was able to take $75,000 from the manufacturer.

A restaurant had 200 credit card records stolen. The hacker was able to charge an additional $120,000 from the credit cards. The restaurant incurred notification costs and direct damages costs of over $250,000.

An employee of an insurance broker lost a laptop while traveling.  The laptop contained names, addresses, birth dates and social security numbers for company employees.  The company paid for one year of credit report monitoring to affected employees to mitigate future issues. The total cost was $25,000.

An auto dealership was the target of identity thieves when two men broke into the dealership after hours, stealing files containing financial information from customer transactions including credit reports, bank statements and social security numbers.  The thieves were eventually apprehended, but not before making illegal purchases with the stolen identities of dealership customers. The dealership incurred over $102,000 in notification costs.

Agent Sales Tips

The best way to sell cyber insurance is to start a conversation with your client or prospect. Have you ever lost your phone or laptop? Think about using these tools:

  • Develop a one page sales or marketing sheet about cyber coverage
  • Offer to review IT policies
  • Develop conversation talking points:
    • Have you ever had any lost or missing information?
    • Do you store any employee or client information?
    • What agreements do you have with your vendors? Describe these agreements and any concerns you might have.
    • Do you have the resources to manage a claim on your own?
  • Use compare and contrast questions:
    • If you had a claim without insurance, how would you pay for it?
    • If I could design the right combination of price and coverage, would that be of interest to you?