June 28, 2016
2 min read
Virtually every single transaction we conduct in the insurance agency business is electronic.
If you stop and think about that for a moment, you’ll realize it’s true. We email or text virtually every time we communicate orally with a client to memorialize the conversation. Our service portals are all online. Our agency management systems are all online. Many of us use VOIP so even spoken communication is electronic.
All of this can be interrupted and the private data, of our customers AND our insurance companies, can be hacked, destroyed, altered, manipulated, stolen, made public or otherwise maliciously interfered with. When this happens the financial consequences to a growing agency will almost always be fatal.
According to a recent IBM study, reported in “Fortune” magazine the cost of a data breach averages $4 million. For financial service firms (read: insurance agencies) the average cost is $221 per record! This is why a loss of this type has such a high bankruptcy creation rate.
But, luckily the insurance industry has stepped into the breech with new, and relatively low cost insurance products to indemnify business for this risk. At OAA our members can purchase an excellent policy, with relatively high limits, for just a few hundred dollars a year. For less than the cost of a data breach of just two records our members can have protection as the carrier steps into the breech between them and potential bankruptcy.
The other good news is that a number of carriers, like The Hartford, are offering low cost, easy to quote options for data breach liability on their BOP policies. This means that it is easy for agents to help their customers be protected against their own potential electronic nightmare. It also means agents have no excuse in the event of an E&O claim if they failed to offer coverage.
Do you have Data Breach Liability coverage? According to the “Cyber Threat Defense Report” over 75% of all firms experienced a cyber breach in 2015. The numbers of breaches, and their seriousness is growing. What are you doing to protect yourself?