Individual Cyber Exposures Growing, Good Coverage Affordable – For Now

By Steven Pincus, Senior Managing Director - Private Client Leadership and Robert H. Rosenzweig, RPLU, National Cyber Risk Practice Leader

Individual Cyber Exposures Growing, Good Coverage Affordable – For Now

Cyber threats aren’t just a business concern. More and more people and families are looking for ways to protect themselves against the growing threats online. The increase in cyberattacks over the last two years is exposing widespread vulnerabilities in the networks and devices we rely on every day. Everyone with a device and an online presence is a potential target, but protection for individuals has been limited compared to businesses armed with complex cyber-defense platforms.

Insurers responded to skyrocketing cyber-related losses on the enterprise side by tightening policy terms and increasing rates. Currently, cyber policies for personal lines are usually part of a Home Insurance policy extension and provide some basic coverage. There are a few carriers however that have created broad and inclusive risk transfer, with high limits at reasonable cost. People, especially those with high-net-worth and large loss potential, should secure proper cyber coverage as the market may harden as it did for businesses policies.

Cyber Exposures for Individuals

Cyber exposures have quietly infiltrated our lives without us recognizing the scope of the threat. Moving into a work-from-home environment increases both your attack surface and cyber risk. Simultaneously, IoT smart home devices are now commonplace, and are popular targets for hackers.

Understanding the breadth of cyber risk, including IoT device vulnerabilities, phishing, extortion, and illegal collection of private data, should be Job One for individuals.

Cyber Coverage for Individuals: Options and Considerations

Currently, it’s hard for underwriters to quantify the risk and assess security measures being taken by individuals so most cyber insurance coverage for personal lines is simply mapped into home insurance policies. However, this approach may be shifting. A few large carriers recently introduced standalone personal cyber policies. In the coming year, more carriers may begin to offer similar policies.

These Initial personal cyber policies are comprehensive, providing risk transfer for losses caused by fraud and cybercrime such as social engineering, criminal deception, forgery of checks, infidelity fraud from employees, theft of cryptocurrency as well as data recovery and system restoration. Additionally, there is coverage for cyber extortion, breach notification, identity fraud and cyberbullying.

This is a great time for individuals to get in and gain broad, necessary protection while the rates are still reasonable. Knowing the scope of the cyber threats, it is only a matter of time before losses begin to mount, which will lead carriers to tighten underwriting requirements, write in exclusions and increase rates.

Cyber Risk Management: Mitigating Losses

To keep coverage at a reasonable price and present yourself as a better risk to carriers, you will need to show that you are mitigating risk through smart cyber practices.

  • Updating systems: Outdated or legacy software, programs, and networks, are easier for bad actors to infiltrate. Updates will often address security gaps and include data encryption. Make sure you are regularly updating your systems.

  • Secure WiFi Routers: Old WiFi routers are another common entry point for cybercriminals. Make sure your routers are up to date.

  • Firewalls, Threat Detection Software: Install cybersecurity software and firewalls on all devices to defend against cyber threats.

  • Strong Passwords: Implement complex passwords and use different passwords for each account.

  • Understand Threats: Work to understand cyber threats and exposures, including what a phishing link looks like.

  • Secure IoT Devices: Research IoT and smart home devices before purchasing to avoid products with known vulnerabilities.

  • Third-Party Vendors, Assess Vulnerabilities: There may soon be third-party vendors or consultants offering mitigation services and home assessments for high-net-worth individuals. They will provide valuable insights into the health of security systems.

Talk to your broker about coverage options to find a policy that’s right for you. If cyber coverage is already a part of your home insurance policy, determine whether it will properly cover your actual risks.

The experienced Risk Strategies team can help high-net-worth individuals get ahead of the underwriting curve and protect against dangerous, expensive cybercrime.

Want to learn more?

Find Steve Pincus on LinkedIn, here. Find Robert Rosenzweig on LinkedIn, here.

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The contents of this article are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.