SCOTT SHANNON: Hi, this is Scott Shannon. I'm a commercial insurance advisor with Windermere Insurance Group. Today, I'd like to talk to you about cyber insurance.
Cyber insurance is a broad term that covers a lot of different areas. So it's important to understand what types of coverages are offered. But at the highest level, cyber insurance covers losses related to internet or computer issues that result from a hack of your system or network.
For example, there is funds transfer fraud, also known as social engineering, whereby a hacker uses stolen information to trick your staff into sending funds to a fraudulent location. This is one of the more common and costly incidents that cyber insurance can address. There's also ransomware, which is a situation where your data or devices are locked up until, unless you pay a ransom, which is another area of heightened activity lately.
Purely, from a business standpoint, insurance can be a valuable tool in allowing you to transfer risk away from your balance sheet or your personal assets. Specifically, for RIAs, there's a lot of opportunities for benefit from a cyber policy. If your client funds happen to be stolen through, as I mentioned earlier, the social engineering, then you can have coverage that way. You can also have coverage if ransomware has happened, you can get coverage there. And if you've had issues where your clients' information has been compromised, it can pay for credit monitoring, as well. Another area of potential coverage includes, if you have business interruption or reputational harm and what results in lost profit, then your policy can cover that, as well. So there are a number of areas that coverage can kick in for a properly structured policy.
But there's another area of value to consider with cyber insurance beyond simply getting a check from your carrier to cover your loss. The carriers have access to cybersecurity experts and vendors who can determine, you know, where a los… how a loss came to… how the breach came to exist, and then what are the steps to remedy that. Cyber insurance… cyber insurance carriers also offer very robust educational and online materials to help prevent attack in the first place.
And, finally, cyber insurance is actually very easy to access. The application that you fill out for coverage typically only includes a handful of questions and most policies do not have exclusions that would kick in if an insurer did not take certain steps to update and maintain their software or their network.
In the last few years, there have been many attacks against large firms and small firms. So any RIA of any size is a potential target. Please make sure you have a plan in place for when your firm is attacked. Thank you for listening.