Internet Banking Cyber Insurance

By Diana Poque e, UNICO Group, Inc. A

re your  nancial ins tu on’s computer systems impenetrable? Even if you have the most state-of-the-art security controls, your customer and corporate assets could be at risk.

Property policies work well when addressing physical damage to computers and the resulting business income and consequential loss if it results in loss or damage to tangible property. The cyber and fraudulent transfer exposure is addressed in other policies. Most  nancial institution bonds today include cover- age for losses involving: • Theft of electronic data or property by hackers; • Damage or destruction to electronic data or computer programs resulting from hackers;

• Computer viruses and employee sabotage; and • Fraudulent funds transfers initiated by fax, email or internet access.

F.I. bond policies outline your responsibilities on wire transfers, such as callbacks, written agreements, etc. Under the bond carriers carve out coverage for account takeover. If your customer’s computer is compromised there may not be coverage. They can also purchase their own cyber policy designed for their business exposure.

The cyber risk policies are written to cover liability and mitigation expense if your customer’s information is compromised in the event of a breach of the bank’s system. They come with exclusions limiting your coverage. Some mandatory retentions can be as high as $100,000. Normally the retention (deductible) would be closer to $25,000.

There are broad-form policies available today from major carriers specializing in insurance for banks. These policies take the coverage another step further to also cover losses from: • Invasion of privacy including information con- tained on phones and other devices;

• Libel, slander, defamation or other oral or written disparagement;

• Loss or damage to electronic data of a customer or passing on a virus;

• Denial, impairment or interruption of service; • Loss of business opportunity; • Unauthorized access to a customer account; • Vandalism – hackers and crackers; • Social networking liability and e-risk extortion; and • Security breach expense, public relations expense, and forensics.

You might assume your bond or cyber policy covers all of the above; however, you may want to request that your insurance agent takes a closer look. Together you can determine what coverage you really need and what you are willing to pay for the additional options.

Internet Banking — Risk Management

Conducting business over the internet, sending con-  dential information online, or even just hosting an



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