IDENTITY THEFT COVERAGE ON INSURANCE POLICIES SPONSORED BY

IDENTITY THEFT COVERAGE ON INSURANCE POLICIES SPONSORED BY

Slide 1 Identity Theft Coverage on Insurance Policies November 8, 2013 Slide 2 What s the big deal? Slide 3 PII Personally Identifiable Information

Slide 4 PII Among other things, First Name (or initial) and Last Name in combination with either: Social Security Number Drivers License Number Financial Account Number Credit/Debit Card Number Slide 5 PII HOLDERS YOU! Information technology Small businesses that use outside vendors State government Accountants Manufacturing Financial institutions Utilities, energy Education Any business with a website used for e-commerce Slide 6 2012 STATISTICS Number of people victimized increased 13 percent, to 12 million 2.2 million more victims than in 2011 Overall losses from identity fraud also fell last year, to $37 billion Source: Javelin Security and Research Inc.

Slide 7 However Average amount of time to clear one s credit history estimated at 607 hours Source: Identity Theft Resource Center Slide 8 Over 20% of victims have increased medical expenses due to stress resulting from the emotional impact of identity fraud Source: Identity Theft Resource Center Slide 9 Average out of pocket expenses: 2009: $387 2012: $631 Source: Identity Theft Resource Center

Slide 10 New ways of doing business Slide 11 New ways of doing business Slide 12 Rise in identity fraud tied to smartphone use

Slide 13 Slide 14 Slide 15

Slide 16 RISK MANAGEMENT TECHNIQUES Avoidance Prevention Slide 17 Slide 18 PASSWORDS THAT SAY HACK ME 1. 123456 2. 12345 3. 123456789 4. Password 5. iloveyou 6. princess 7. rockyou 8. 1234567 9. 12345678 10. abc123 11. [Your Name] 12. [Your mate s name] 13. babygirl 14. monkey 15. Jessica 16. Lovely 17. michael 18. Ashley 19. 654321 20. Qwerty

Slide 19 TrSwTwSi04&07bN12 Ih2dWa28&32Yo M5kpri24:51 Slide 20 PREVENTION Shred Don t carry Social Security card (Medicare!) Slide 21 PREVENTION Don t carry all of your credit cards Be careful about leaving outgoing mail in your mailbox with the flag up

Slide 22 PREVENTION Check your bank statement every month Get your credit report every year Pick a random PIN When ordering checks, pick them up at the bank Slide 23 RISK MANAGEMENT TECHNIQUES Retain the exposure Slide 24 IF THE CUSTOMER RETAINS THE EXPOSURE Passive Retention Don t ask, don t tell E & O Active Retention

Slide 25 RISK MANAGEMENT TECHNIQUES Retain the exposure Fund a reserve for the exposure Contractually transfer the exposure Slide 26 ALTERNATIVES TRANSFER CHOICES: Credit card coverage Bank coverage Stand-alone coverage Slide 27 RISK MANAGEMENT TECHNIQUES Retain the exposure Fund a reserve for the exposure Contractually transfer the exposure Transfer to Insurance Company

Slide 28 ISO HO-91 version 6. Credit Card, Fund Transfer Card, Forgery and Counterfeit Money We will pay up to $500 for: Legal obligation from loss of credit card Loss resulting from theft/unauthorized use of a fund transfer card Slide 29 ISO HO-91 version 6. Credit Card, Fund Transfer Card, Forgery and Counterfeit Money We will pay up to $500 for: Loss caused by forgery or alteration Loss from accepting counterfeit currency Slide 30 ISO HO-2000 &2011 version 6. Credit Card, Electronic Fund Transfer Card, Forgery and Counterfeit Money

Slide 31 Example of ID Theft Expenses Long distance phone expense $467 Notary fees $200 Lawyer expenses (for help with $3,450 affidavits) Copying and Mailing Costs $142 Total Costs Covered by Homeowners $0 Total Costs $4,259 Slide 32 Increases $500 limit to up to $10,000 Slide 33 Pays for your: Lost Income to meet with lawyers ($200 per day) Reasonable attorney fees to defend you

Slide 34 Pays for your: Loan origination fees Long distance calls Mailing costs All Subject to $15,000 per occurrence Slide 35 All Subject to $250 deductible Slide 36 Example of ID Theft Expenses with HO 04 55 Long distance phone expense $467 Notary fees $200 Lawyer expenses (for help with $3,450 affidavits) Copying and Mailing Costs $142 Total Costs $4,259 Total Costs Covered by Homeowners $4,259

Slide 37 Is That Enough? Slide 38 Data Breaches to Companies 80% cost < $1M 15% cost between $1M and $20M 5% cost > $20M Slide 39

Slide 40 Business Income/Extra Expense Slide 41 Data Processing Equipment, Media and Data Inland Marine Policies Slide 42

Slide 43 Slide 44 Commercial Crime Policy Slide 45 Types of Cyber Coverage and Limits Available

Slide 46 Liability Remediation Fines and/or Penalties Slide 47 Slide 48 Failure to secure data Loss caused by an employee Acts by persons other than insureds Loss resulting from the theft or disappearance of private property

Slide 49 Types of Data Covered Slide 50 An individual s personally identifiable information Nonpublic data (such as corporate information) Non-electronic data, such as paper records and printouts Slide 51 Remediation Costs

Slide 52 Crisis management services Notification of potentially affected customers Credit monitoring services to affected customers Costs to re-secure data Slide 53 EXTERNAL REMEDIATION COSTS Cyber-crime attorney services: fees run $700 per hour Investigation: computer forensics fees ranging from $300 to $700 per hour Slide 54 EXTERNAL REMEDIATION COSTS Public Relations Experts: to deal with the media with charges running perhaps $10,000/month billed at rates of $400 per hour

Slide 55 REMEDIATION COVERAGE SERVICES Remediation services are prenegotiated and prepackaged Much like Kidnap and Ransom coverage, knowing how to respond to a loss can be daunting. Slide 56 PROPERTY AND THEFT COVERAGES Proprietary data is the most important that has to be considered but also data that is in your insured s care, custody or control Slide 57 LIABILITY COVERAGE Carefully consider who is an insured Policies differ Most policies do not cover subcontractors, who may represent the largest exposure Most will add subs for an additional premium

Slide 58 LIABILITY COVERAGE Clarify what is a claim Again, policies differ Policies do not specifically address the effects of phishing, pharming, or identity theft They are addressed through breach of security sections, or unauthorized access Slide 59 CLAIMS REPORTING, ERP OPTIONS, AND COUNSEL All liability forms are claims-made Extended Reporting Period options are important Carriers reserve the right to choose counsel Slide 60 PRIOR ACTS COVERAGE All policies offer prior acts coverage Many require it Territory All of the policies provide true worldwide coverage, regardless of where the suit is brought

Slide 61 SPECIFIC COVERAGES INCLUDED IN POLICY Errors & Omissions Virus Unauthorized Access Security Breach Slide 62 SPECIFIC COVERAGES INCLUDED IN POLICY Personal Injury Advertising Injury Loss of Use Resulting Business Interruption Slide 63 SPECIFIC COVERAGES INCLUDED IN POLICY Copyright Infringement Trademark or Service mark Infringement Patent Infringement

Slide 64 EXCLUSIONS Every policy differs; Watch for those related to: Bankruptcy/financial impairment Intentional acts Theft of Intellectual Property Loss of use Contractual Liability Slide 65 RISK MANAGEMENT SERVICES All of the companies offer risk management services, such as loss prevention, and risk assessments Depending on the size of the account, a prior risk assessment may be required before pricing Many also offer tests by third-party service providers Slide 66 Sometimes insurance is not the answer But, making customers aware of the coverage can save you E&O problems

Slide 67 But we had locks Carol Meyerowitz CEO, TJX Companies June 26, 2007