Getting Personal: Cyber Insurance for Individuals

According to the Pew Research Center, 64 percent of Americans have an online account involving health, financial or other sensitive data.1 As more and more people rely on the internet to do business and manage their personal lives, their information has the potential to become susceptible to a cyberbreach.

With this in mind, a new form of insurance has emerged – Personal Cyber. Insurance Market Source connected with one of its pioneers, Bill Gatewood, Corporate Vice President and Director, Personal Insurance, Burns & Wilcox, to learn more about Personal Cyber coverage.

Q: What is a Personal Cyber policy and why should individuals consider this coverage?

Bill Gatewood (BG): For the last several years, cyber exposure has been a growing issue in the commercial world. In the light of several high-profile security breaches, there has been a heightened realization that it takes a great deal of effort to make compromised clients whole again once personal information has been stolen. Now, Personal Cyber insurance policies will give insureds assurance in the case of a cyber-attack, allowing them to file claims for ransom and extortion payments, identity theft fees, and data restoration expenses related to a personal cybersecurity breach. At this moment it is not a widely offered product, but as the need continues to grow, so too will the availability of coverage.

A record-breaking 15.4 million Americans had their identity stolen in 2016, up 16 percent from 2015.

If an online retailer or a hospital’s system is hacked, for instance, and sensitive information was compromised, clients need the same protections as the businesses they solicit. Families in particular are at a high risk for identity theft or cyber extortion. The Equifax breach is a great example of how millions of individuals’ information was breached. Each of those people are now exposed to identity theft, and without a Personal Cyber policy, many do not have access to the tools and professionals to help rectify the situation.

These policies also protect against cyber extortion – a relatively new phenomenon where a hacker is able to gain access to personal information and hold it ransom for a stipulated amount of money. Globally, 34% of cyber victims end up paying ransom.2 A Personal Cyber policy will provide coverage for the ransom itself and for the cost of data restoration.

Q: What are some examples of situations that a Personal Cyber policy would cover?

BG: A record-breaking 15.4 million Americans had their identity stolen in 2016, up 16 percent from 2015.3 The most common protection a Personal Cyber policyholder would receive is against identity theft, which can come in many forms. Traditionally, financial transactions, such as credit card use or applying for a loan, are the most top of mind for consumers. However, exposures go beyond finances. Unfortunately, many people find out about identify theft too late, sometimes as they file their tax returns only to realize that it was already filed in their name to claim the refund check, for instance. At that point, it is difficult to prove that their identity was stolen

In another example, health fraud is increasing. With a social security number, other people would be able to undergo procedures under a client’s name, leaving them with the hefty bills.

Q: What are some actions that clients can take to help protect their data?

BG: In addition to offering Personal Cyber coverage, brokers and agents can recommend that clients be aware of what information they place online, and how they protect it. Many people have an outdated impression that hackers are just rogue individuals, typically working out of someone’s basement – this is no longer the case. Today, hacking is a full-time job and organized crime in the cyber world is a huge syndicate. In a three-year period between 2013 and 2016, stealing funds from individuals was a $2.3 billion business.4

However, there are a few initial steps that consumers can take to protect themselves, including:

  1. Personal Cyber policy: This will protect clients against traditional identity theft, paying any direct monetary losses that are unrecoverable as well as any expenses to investigate and remediate. Policyholders also get the benefit of a specialist to help restore their credit report.
  2. Install a password manager: Password strength and encryption are important, and using a password manager allows users to not have to rely on memory to remember passwords. The manager will also encrypt users’ information and automatically change his or her password every time they access a site.
  3. Use available resources: The Identity Theft Resource Center (ITRC) can provide clients with a wealth of knowledge and act as a great educational resource for people needing help to navigate a cyber-attack. And best of all, it’s free.

Personal cybercrime is not something that can be prevented. In fact, nearly two-thirds of Americans have experienced some form of data theft.1 With the advent of Personal Cyber insurance policies this year, brokers and agents can offer to help clients who are at greater risk, giving them the best line of defense if information is compromised.

Sources:
  1. Pew Research Center
  2. Cyberscoop
  3. NBC News
  4. FBI

Learn more about Personal Cyber coverage.