Does Your Agency Need Cyber Liability Insurance?

September 16, 2020
By: Voldico

Insurance agencies have a unique responsibility to lead by example when it comes to mitigating unforeseen issues, including protecting their digital presence.

As a professional in the business of guarding against the unknown, can you say for certain your business is protected? 

Insurance agencies have a unique responsibility to lead by example when it comes to mitigating unforeseen issues, and that includes protecting their digital presence. 

In the wake of the pandemic, many agents and agencies are moving or growing a significant portion of their business online. These moves range from quote requests to ad campaigns, and may even include videoconferencing appointments. 

While digital access is considerably more convenient and easier to record for paperwork purposes, it also exposes very sensitive data to potential theft. To cybercriminals, information shared with an insurance company represents a treasure trove of identity theft-ready data — names, birthdays, social security numbers, bank accounts, and even medical records.  

Why Insurance Agencies Need Cyber Liability Policies

From an ethical standpoint, your clients rely on the services you provide to protect themselves, their property, their families, and in the case of life insurance, potentially even their legacy after death. That requires an incredible level of trust on the part of a policyholder — a trust that must be earned initially and carefully maintained throughout your business relationship. 

When your client trusts you with sensitive information on their finances, their health, their property, and loved ones, they expect that it will remain secure in your keeping. A breach of that trust doesn’t just affect the agency victimized by cybercrime, but in many cases the insurance industry as a whole as well. 

Far Better Than the Alternative

In terms of eventuality, no digital system on earth is completely immune to tampering or hacking. Even systems disconnected from the internet can be accessed or corrupted via malware programs installed on a flash drive. 

Insurance products are sold every day to policyholders concerned about incidents with low probability but high personal costs, such as catastrophic accidents or plane crashes. Even if an agency feels they are an unlikely target, it bears repeating that no system is truly safe. 

In 2020, cyberattacks were unleashed on hospitals across the country — a version of malware called ransomware demanded payment in cryptocurrency before returning control of frozen records and systems. If such a widespread attack could occur to institutions as benign as hospitals, it’s not a great leap to imagine it happening to an insurance agency that had to make a polarizing call on a disputed claim. 

Weighing Risks Versus Rewards

The industry consensus doesn’t tend to favor a hard “yes” or “no” on whether an insurance company needs cyber liability insurance, but is scaled instead. Essentially, the larger and/or broader an insurance agency becomes, the greater the need for cyber liability protection. 

When cybercriminals choose their targets, they tend to look for one of two attributes — ease of breaking into a system or the amount of useful data they can gain from doing so. As the two carry roughly the same initial risk if they’re caught, target-rich environments (e.g. large companies with big databases) tend to be in more danger. For smaller agencies or individual agents, the cost of a cyber liability policy may not be justified by their risk profile. 

One of the best ways to determine if a cyber liability policy is a must for your agency is to confer with your peers, particularly in the insurance niche(s) you serve. Networking events and peer discussion groups are opportunities more readily available when you’re a member of an insurance cluster like Voldico

Contact us today to discuss what we can do to protect and support your insurance company - online, offline, and everywhere in-between.