Fifteen Years Later, Scary Computer Threats Really Do Exist

Anyone who knows me knows that my grandsons are the joy of my life. I spend as much time as I can with them—I go to their school events; enjoy having them visit at home; and I try to make as many games as I can to watch them play soccer. They are quite good. In fact, I would call them naturals at the sport.

Recently, while I was watching my boys at a game, I began to wax nostalgic. It amazes me that they are 15 years old this year—Fifteen! The time has gone so quickly and yet so much has changed since the year 2000—or, as we may remember it, Y2K. That got me thinking back… What a tough year for insurance agents. It was so hard to sell coverage in 1999, because nobody wanted to buy insurance. The notorious Millennium bug, a computer glitch caused by programmers who set dates to automatically update with the assumption that the subsequent year would begin with 19.., kept everyone away. You couldn’t place a risk having to do with computers or anything – the carriers were sure the world was going to blow up at midnight. People weren’t sure they would have power, and they certainly weren’t sure what would become of their coverage or their companies. So, why get insurance? The crisis put IT on the map, and it scared the heck out of everyone.

Well, January 2000 came and went, and everything was still working. It was a huge relief, but it gave IT a black eye. To this day, we remember it as a “Chicken Little” scenario.

Now our big worry is cyber liability. Maybe in 2000-and-10-minutes everything was still working, and we were relieved that nothing happened, but cyber-crime is real and it’s happening every day. This crisis is not over-hyped. Only recently, the IRS was hacked by Russian hackers, who stole millions in refunds. Likewise, I was watching the news this week and saw a story about new apps that engage owners of mobile devices, and they don’t even realize that downloading a seemingly benign program gives hackers access to enter your phone, iPad and other computers. The thought is frightening.

What’s worse is that this is only the tip of the iceberg and I don’t think hacking is going to stop. It will only become more sophisticated and prevalent, and it will not go away. I don’t think a day goes by that we don’t hear a news story about a retailer, financial institution or medical organization that has fallen victim to cyber-crime, and it’s inevitable that it will reach the insurance industry. There are very few insurance agents who can sustain the financial cost of having their system hacked into.

While cyber-liability is probably the biggest exposure any business faces today, it amazes me that so few of us have actually invested in coverage to protect ourselves. As I’ve said in the past, all it takes is a few agents to have a claim and everyone will be running to the door to buy the coverage. But I’d hate to be that first claim.

The current New York State Department of Financial Services Superintendent, Benjamin Lawsky, has made cyber-crime a priority. But, he is focused mainly on banks and companies, rather than agencies themselves. Agents need to take the same advice they would give their clients; do an honest assessment of your exposure and make sure you and your business are covered. And, as we would tell any of our clients, not all cyber policies in the market are equal. Some BOPs give minimal coverage and even some package policies have minimal coverage, which as far as I’m concerned is like having nothing. I suggest agents shop various products available and include the PIA product, underwritten by the Philadelphia Insurance Co., which I think is a superior product, with eight insuring agreements that allows coverage to be customized based on an agency’s unique needs.

Agents may put off purchasing cyber coverage, assuming it’s too expensive. But not having coverage is a much more expensive risk to assume. Unlike Y2K, cybercrime is not over-hyped. I hope someday my grandsons and I will reminisce about the days when hackers were scary and the personal data we keep about ourselves and our clients was perilously exposed to criminals. Until then, I know I will sleep a little more soundly knowing there is coverage available and I’ve done all I can do to protect my business. Have you covered yours?