FGIB:Covering Cyber Risks with Insurance Designed to Respond

In the wake of continued escalations in phishing and denial of service attacks and the latest threat of data sabotage (manipulating data such as financial records, bank account data, stock market information or companies’ financial results for financial gain) impacting the financial industry, comprehensive insurance coverage for cyber attacks and privacy breaches is a necessity. Furthermore, U.S. regulators have stepped up oversight and expectations for multiple layers of security and obligations to notify national regulators of significant cyber attacks or data breaches.

Financial Guaranty Insurance Brokers (FGIB) provides community banks, commercial lenders and Financial Technology (FinTech) companies with robust Cyber Liability/Network Security Liability insurance solutions to respond when a cyber threat occurs. We also offer Cyber coverage to a wide range of small and mid-size companies.

When purchasing Cyber coverage it’s imperative to carefully review your insurance policy to ensure that the scope, limits, and sub-limits of the coverage are appropriate. This is what our professionals at FGIB will do for you.

Cyber Risks Insured

The following represents the four basic categories of risks companies should evaluate in their Cyber program:

  • Negligent (unintentional) breaches caused by you, an agent, or a vendor.
  • Intentional attacks/breaches, with the goal of making money, or a statement, by causing or threatening to cause the organization or its customers harm.
  • Intentional or unintentional, where a blogger or webmaster uses trademarked or copyrighted material, or invades the privacy of a third party without permission.
  • An inherent flaw or hole in the hardware or software causes data loss or a security breach.

Also, remember that for many banks, data breach risks can also occur under low-tech circumstances as well. For example, a loan officer leaving documents containing a customer’s confidential information out in the open where other customers can see them or a customer service representative inadvertently sending one customer an email that was intended for another can constitute data breaches that lead to liability.

What’s Covered

Losses arising from cyber risks tend to fall into one of two general categories:

  • First-Party Loss, which involve costs directly incurred by the firm as a result of the breach. This includes expenses involving privacy notifications, public relations efforts, forensic investigations, data restoration, and business interruption, and, in some instances, ransom payments.
  • Third-Party Loss involves liability losses and includes defense costs and indemnity payments in connection with customers’ claims for damages and regulatory investigations. Some policies can also be designed to cover regulatory penalties.

FGIB will work with you to analyze your risks so that you have sufficient insurance to cover them.