Insurance for Professionals
A d a m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e sCyber Liability
Insurance…
Managing Cyber and Crime
Risks Through Insurance
Ada m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e s
Presented by:
Adam E. Gwaltney, Agent
Specializing in Professional Liability Insurance
Ritman & Associates, Inc.
A d a m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e s
ALTA Best Practices That Apply…
#3 – Adopt and maintain a written privacy and information security program to protect Non-public Personal
Information (NPI or PII) as required by local, state and federal law.
** NOWHERE in Best Practice #3 is it stated that insurance should part of your “program.” However, is it implied?
A Cyber loss can be the single most catastrophic loss facing your agency.
The loss of “data” or of “securities” can be the result of Cyber theft A d a m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e s
ALTA Best Practices That Apply…
#6 – Maintain appropriate professional liability insurance and fidelity coverage.• Professional liability (E & O ) to protect your professional errors
• Fidelity (coverage for theft) – can also be referred to as Crime
• So why doesn’t ALTA specifically address Cyber Insurance as they do E & O and Fidelity…?
A d a m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e s
#2
Escrow
Trust Accounts
#3 Information Security
#6 Errors & Omissions Insurance
A d a m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e s
Two Main Questions…
#1 –What do the bad guys want?
Money and Information
#2 – How do I insure the risk?
Crime Insurance AND
Cyber Liability Insurance
A d a m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e s
Finding
Coverage
Partial Coverage for the Risks…
1. Business Owners – you can only endorse,
limited coverage, will only cover nominal loss,
not designed for a true breach or theft
2. E & O – very few carriers even offer
endorsements, limited scope, not
recommended as coverage is limited and is
not designed for a true breach or theft
3. ESB – limited scope of coverage, low limits,
used as a stop gap measure
A d a m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e s
How do I Insure the Risks - Crime
Crime Insurance Protects money and
securities.
•
Employee Theft (FIDELITY)
•
Forgery or Alteration
•
Inside the Premises - theft of money and securities
•
Inside the Premises - robbery or Safe burglary of other
property
•
Outside the Premises
•
Computer Fraud
•
Funds Transfer Fraud
•
Money Orders and Counterfeit money
A d a m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e s
Crime Insurance
o Designed to cover money AND securities NOT data OR information!
o Social Engineering Fraud – the fraudulent email/internet/telephone burglar
o Can purchase high limits of coverage
o You can tailor the policy to your agency’s needs
o Loss payee endorsements can be added to cover your underwriter(s)
o Very broad coverage form as compared to the ESB
o Premiums can be substantially lower than those of the ESB Ad
a m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e s
How do I Insure the Risks –
Cyber Liability
Cyber liability Insurance Protects
Information and Data
o Policy affords coverage in two sections:
o First Party – losses that directly affect the insured
o Third Party – losses arising from a breach but originating from a third party
*SOME Cyber Liability policies are adding Social Engineering coverage for additional premium – this covers MONEY – currently very expensive
A d a m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e s
Cyber Liability Insurance – 1
st
Party
Will cover costs incurred by the insured (You): o Breach notification/response expenses
o Public relations
o Forensic consultants/investigation o Credit monitoring
o Cyber extortion
o Business interruption/extra expense o Loss of actual data-system restoration
o PCI (Payment Card Industry) fines and penalties
* First party coverage is the lynch pin of coverage and is generally UNDERINSURED! A d a m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e s
Cyber Liability Insurance – 3
rd
Party
Will cover claim expenses and damages you are legally obligated to pay as a result:
o A network security breach
o Loss of private information – privacy liability o Regulatory actions or proceedings, penalties o Website media content
*Third party coverage is generally offered in higher limits as compared to first party and is the lesser of the two risks monetarily speaking. A d a m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e s
Misconceptions in the Market…Crime
o My Fidelity Bond covers my crime risk – does it really?o Crime insurance is unavailable to the title industry - WRONG o My underwriter requires a loss payee provision on my Fidelity
Bond– Crime can allow for this too!
o It’s very expensive- WRONG – in most cases, the crime insurance policy is LESS expensive than a Fidelity Bond
o Protects from internal and external risks o Protects escrow and operating accounts
A d a m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e s
Misconceptions in the Market…Cyber
o Coverage is expensive (compared to ESB, Crime, E & O v. overallmonetary risk)
o No markets for title industry – actually dozens of markets are “open” to title industry
o Cookie cutter policies can expose your company!
o I have my “other” insurance policies endorsed and that’s all I need – WRONG
o My Best Practice security is in place therefore I do not need Cyber Insurance - - a cyber crime can be the most catastrophic loss facing your agency
o It’s the Third Party lawsuit that’s going to bankrupt me – NOT TRUE! First Party losses can bankrupt you
o Public relations won’t help after a data loss – breach coach can be critical at the onset
A d a m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e s
Summary for Cyber and Crime
o Both Cyber Liability and Crime Insurance policies should be carried by all title agencies
o They actually work in tandem
o Cyber will protect data and Crime will protect money, both from internal and external risks
o Many experts predict that a full, stand alone Cyber Liability policy will soon become one of the top three insurance policies in any business insurance portfolio
o Policy endorsements for cyber and crime simply do not cover your risk properly
o Stand alone policies are recommended
A d a m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e s
Disclaimer
This information is written from an
insurance perspective and is
meant to be used for informational
purposes only. It is not the intent
to provide legal advice, or advice
for specific fact, situation or
circumstance. Contact legal
counsel for specific advice
.A d a m E . G w a ltn e y, A g e n t, Ri tm a n & A sso ciat e s
