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Inside Tucson Business Article – Cyber Insurance: A Necessity in the Digital Age

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Linda Drake

Thank you to article author Linda Drake of Trailblazer Advisors and to Inside Tucson Business for allowing us to republish this article on our blog. Client Cyber Crime Insurance is available to all business customers of Grandpoint Bank and its divisions, The Biltmore Bank of Arizona, Bank of Tucson and Regents Bank.

Read the original article here:
http://www.insidetucsonbusiness.com/business_chatter/cyber-insurance-a-necessity-in-the-digital-age/article_3bbe8650-4f93-11e6-a8b2-8baff37c26c2.html↗

Whether you are a business large or small, old or new, the dangers of a cyber breach are lurking. The truth is that all businesses today are digital in one form or another. It is the age of the Internet of Everything! Cloud computing is the basis of almost all transactions and with every touch of the keyboard or data entry, there is an attached risk of a breach. And with that breach, comes the liability that might not just be disruptive to your business; it could be devastating.

The costs of a breach can be enormous. (Imagine losing a major bank transfer or assuming a loss of $10,000 for each cyber-security infraction.) By the way, your attacker can come from the outside or inside, as 70 percent of breaches are initiated by employees or former employees.

So what this thing called cyber insurance? Cyber insurance arose out of the traditional Errors and Omissions (E&O) coverage known to most businesses. Over time coverage was extended to viruses, data corruption to connected client systems, or damage affecting customers. Generally, early adopters were technology-based companies.

More than a decade ago, network security policies expanded to include breaches of confidential information. At that point, the retail segment adopted cyber insurance on a wide scale.

Coverage for any business could be simple or complex. The determining factor is an employer’s decision on degree of acceptable risk. Let’s take the simple first.

The Bank of Tucson, through Grandpoint Insurance Services, now offers cyber insurance coverage for its customers at a nominal cost. The coverage for business accounts protects against losses for funds transfer fraud (when someone impersonates your company for a funds transfer) and cyber deception (when a criminal pretends to be your vendor employee or client and gets you to transfer money to them). Mike Hannley, president of Bank of Tucson, announced the new product in the last month. Mike commented, “Internet criminals do not use guns for illicit gain, but they gladly use your computer and network for paydays!”

Let’s take a look at broader, more complex cyber insurance. That kind of cyber insurance may have several parts:

Network Security: Your network has failed in some form. It could be that someone is trying to shut down your network to in an effort to stop you from conducting business. Or, you’ve just experienced a data breach, some form of extortion, or tapped your system to advance a virus to all of your connected transmissions.

Privacy: Privacy is huge and does not necessarily have to be connected to a system failure. There are many known cases of information of physical records that are not properly disposed of, including human errors (think of a lost laptop with an easily penetrated passcode) or a hard drive with customer records that somehow got into the wrong hands.

Media Liability:  This aspect covers advertising injury claims like copyright, libel and slander. Coverage may extend to offline content as well.

Digging deeper, network security and privacy liability policies covers first and third party liabilities. First party means the direct costs of responding to a breach; third party means it applies when people sue or make claims against you.

First party inclusions: 

Costs of notifying anyone attached to the breach

Loss of profits and business interruption

Legal advice and regulatory obligations

Public relations expenses

Third party inclusions:

Regulatory fines and penalties

Damage and judgments related to the breach

Legal expenses

Costs of responding to regulatory inquiries

According to Jack Clements, CPA at the Clements Agency, “Every company, large or small, should at least consider cyber Insurance. There are so many examples of exposure to loss that it is difficult to list them all; some exposures are unique to certain types of businesses.”

“And don’t forget about controls; they are critical,” Jack continued. “In broad policies, premiums are based upon the quality of your controls. Many companies believe that their controls are so strong, that it can never happen to them. Believe me, it can and it will.”

Another aspect of this discussion is commonly known as “Social Engineering” or “Duping.” This is a scheme where a seemingly legitimate email is sent to you asking for money or confidential information. It happens all the time. Jack added, “In fact, an attempt was made on our office this week. We received a business email from my brother, with whom we do business, asking for a wire transfer. When we called him, we learned that it was completely fraudulent. Had we complied, the transaction would not have been covered by our Cyber Policy, since we willingly sent the money. We would, however, have been covered by the Social Engineering endorsement that we have on our package policy. Just another area to think about.”

Linda Drake is a 25-year, seasoned global entrepreneur, corporate executive, author and Certified Professional & Executive Coach. 

For more information on the Client Cyber Crime Insurance, visit www.grandpointinsurance.com (California Insurance License #0K82434).

Insurance Products are:
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Insurance Products are offered through Grandpoint Insurance Services, Inc., a non-bank insurance agency affiliate of Grandpoint Bank, and facilitated through LBW Insurance & Financial Services, Inc., an unaffiliated insurance agency.

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↗ Linking to Non-Biltmore Bank Websites

This icon appears next to every link that directs to a third party website not affiliated with Biltmore Bank. Please be advised that if you click this link you will be taken to a website hosted by another party, where you will no longer be subject to, or under the protection of, the privacy and security policies of Biltmore Bank. We recommend that you review and evaluate the privacy and security policies of the site that you are entering. Biltmore Bank assumes no liability for the content, information, security, policies or transactions provided by these other sites.

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Biltmore Bank Makes First-of-its-Kind Cyber Crime Insurance Available!

 

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Biltmore Bank has introduced a new way for its business banking clients to protect themselves from financial losses due to funds transfer fraud and cyber deception through a first-of-its-kind cyber insurance group policy.

Grandpoint Bank has created Grandpoint Insurance Services, Inc., a non-bank insurance agency affiliate, to develop the Client Cyber Crime Insurance product. The policy, offered to customers of Grandpoint Bank and its divisions, including Biltmore Bank, offers cyber crime loss coverage that is specifically geared to monetary losses. It was created as an affordable and easy alternative to individually underwritten, higher-priced commercial crime insurance policies.

The majority of businesses don’t realize that they have significantly more exposure for losses due to fraud than individual account holders, who are afforded certain regulatory protections. Businesses are often tricked into approving fraudulent transfers, notwithstanding internal controls to identify and prevent this kind of risk.  According to the FBI, since 2013, over 17,000 businesses have lost an aggregate of more than $2.3 billion to one type of cyber crime alone, known as the business email scam.

Even as monetary losses due to cyber crime have skyrocketed in recent years, many traditional commercial crime policies specifically exclude losses arising from cyber deception.

“We are excited to make this new coverage available to our business clients,” said Petra Griffith, Director of Product Development for Grandpoint Bank. “The policy focuses on the kinds of coverage that directly address the key fraud risks that businesses face – losses to their bank accounts through cyber crime.  Cyber crime is a major concern for businesses, especially since they are typically liable if cyber criminals steal funds from their business accounts. They often don’t have the appropriate insurance in place and are finding it more difficult to protect themselves in this ever evolving, increasingly sophisticated cyber crime environment.”

The Client Cyber Crime Insurance policy is available exclusively to business clients of Grandpoint Bank and its divisions, Biltmore Bank of Arizona, Bank of Tucson, and Regents Bank, through Grandpoint Insurance Services, in partnership with LBW Insurance & Financial Services, Inc.  The policy is underwritten by Hiscox Inc., on behalf of Underwriters at Lloyd’s, London, which is rated A by A.M. Best. Insurance products are not a deposit, not FDIC insured, not federal government agency insured, not bank guaranteed.

The Client Cyber Crime Insurance group policy coverage helps reimburse funds in business deposit accounts lost due to funds transfer fraud and cyber deception and is offered at premiums that represent substantial savings from individual policies currently available on the market. Any business that has a deposit account at Grandpoint Bank or its divisions is automatically eligible to enroll in the policy and select from a range of coverages with premiums that start at $30 per month.

“Educating and alerting our clients, and the broader business community, about established and emerging cyber crime trends is a commitment we’re passionate about,” said Rich Endicott, President of the Biltmore Bank of Arizona. “We’ve been working for over a year to create a more powerful solution to help clients protect their financial assets against attacks by cyber criminals.”

For more information on the Client Cyber Crime Insurance, visit grandpointinsurance.com.

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Insurance Products are:
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Insurance Products are offered through Grandpoint Insurance Services, Inc., a non-bank insurance agency affiliate of Grandpoint Bank, and facilitated through LBW Insurance & Financial Services, Inc., an unaffiliated insurance agency.

screen-shot-2016-09-28-at-7-28-21-pm

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