Here’s the reality of our digital age: your firm is a prime target for cyber crime, especially customer identity theft. That’s because the financial and personal information you collect to ensure you’re dealing with credible individuals means you now have valuable data worth stealing. As this recent MortgageOrb.com article points out, you hold a “treasure trove” of information offering cyber thieves everything they need for identity theft.
For this reason, Cyber Liability Insurance has become more crucial. In fact, 80% of financial institutions (which includes both traditional institutions, such as banks, as well as mortgage/real estate industry firms) now purchase this coverage. Why? Think of it this way. What if someone stole your customers’ private information? What would the costs be to your business? First, you would need to notify customers as 46 states (with 2 more pending) require you to alert individuals of security breaches involving their personal information. As a start to rectifying the situation with customers, you would most likely pay for a service to monitor their credit. On top of that, you would need to perform crisis and reputation management through PR and other marketing efforts. Cyber Liability coverage could help you with these expenses.
And just what sort of costs are we talking about? A study by the Ponemon Institute found that, on average, a data breach costs a firm $214 per record. If you have as few as a 1,000 customer records in your database (customers, past customers, prospects, etc), a breach could cost you $214,000. So, how big is your database? You can see how this could very quickly become a huge out-of-pocket expense for you.
All of these reasons along with the fact that a recent PricewaterhouseCoopers report ranked Cyber Crime as the #2 most prevalent type of fraud speak to why Cyber Liability insurance has become a crucial part of any firm’s risk management program. All in all, it’s a coverage worth considering and a conversation worth having now.