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The Three Dimensional Game of Cyber Liability
Agency Exposure or Opportunity ?
N avigating the issues surrounding cyber liability is perfectly described by the expression “ playing three dimensional chess .” It ’ s complicated because it involves the challenging subjects of a complex insurance coverage , married with understanding technology and both federal and state laws . Combine all of these subjects together and it ’ s easy for agencies to get lost in the morass that is cyber liability . How your agency approaches the subject of cyber liability will determine if it will be an exposure or opportunity for your agency . The good news is that the association has resources to help members navigate cyber for you and your customers . This includes guidance for protecting your agency ’ s data , cyber coverage for your agency , educational resources for staff , and solid cyber markets to insure your clients .
Cyber coverage for your agency
We recently asked our members how many of them had a stand-alone cyber policy for their agency . Only approximately 25 percent of our members currently purchase this coverage . Aside from your E & O exposure , what is a greater exposure to loss than cyber claims ? Many members may solely be relying on the data breach coverage provided by their E & O policy , which is providing a false sense of security . While a nice policy feature , the first and third-party limits are not adequate protection , and the scope of coverage provided does not compare to those provided by a stand-alone policy . For example , cyber extortion and fraudulent instruction ( a . k . a . social engineering ) are a few of the coverages not included . Further , your agency E & O policy is critical to your ability to operate as coverage is required in every agency / company agreement you have . You don ’ t want a cyber liability claim hampering your future ability to get a comprehensive and affordable E & O policy because of unfavorable claims experience . We can help as we have a program specifically for our agents with very reasonable premiums . Email asck @ kaia . com to get a cyber quote for your agency today .
Protecting your agency ’ s data
Does your agency have a security plan for protecting customer data ? If not , do you need one to be in compliance with federal laws , such as Gramm-Leach Bliley which require a written security program that is commensurate with your agency ’ s size and sophistication ? The good news is that the Big ‘ I ’’ s Agents Council of Technology ( ACT ) has some notable resources for members . Located under Security and Privacy on the ACT website ( www . iiaba . net / act ) is the “ Agency Cyber Guide 1.0 ” which outlines tools for compliance and protection . ACT has also developed an
DAVID HULCHER KAIA Executive Director
“ Agency Cybersecurity Policy Template ” to help members develop a cybersecurity policy . The legislative landscape of cyber laws continues to change with states like New York passing new cyber laws and the NAIC drafting state model legislation . In addition , some carriers are adding data security / breach clauses to their agency / company agreements or beefing up existing clauses . Getting a data security plan in place may be critical .
Get educated - Understand exposures and coverage
There are very few businesses out there that don ’ t have a cyber liability exposure . While the massive data breaches like Equifax and Target make the news , it is the smaller businesses that are most vulnerable . In order to effectively serve agency customers , your staff needs to understand their exposures and the coverages that can help transfer the risk . KAIA can help as members have access to an on-demand web-based video class called “ Cyber Insurance – Training for Agents and Brokers .” Taking this class will provide your staff with an increased level of comfort in selling cyber liability coverage to all of your commercial lines accounts . After taking the class , they will also have the opportunity to get the “ cyRM ” – Cyber Risk Manager designation .
Cyber Markets – Opportunity for Growth
If your agency doesn ’ t have a lot of cyber markets , we can help . We ’ ve developed relationships with several insurance providers that offer some of the strongest coverage forms in the marketplace . Offering cyber coverage could be a real opportunity to generate organic growth . In addition , offering cyber to every customer can also reduce E & O exposure if customers ’ rejection of coverage is documented in their file . We have created a coverage rejection form for cyber that we are happy to share .
There ’ s no doubt that the topic of cyber liability is complex , but KAIA offers members tools that can help . Whether cyber is an opportunity or an exposure will depend on how your agency approaches it . The one thing I know is that the exposure to member agents and their customers isn ’ t going away anytime soon .
4 KANSAS INSURANCE AGENT & BROKER | September - October 2017 |