The Expert Podcast

Description:

• Cyber attacks are becoming more frequent, especially in the insurance and investigative industries.
• Small businesses are being targeted more by hackers, as they often lack the resources for strong security measures.
• Many small businesses don't prioritize security and are unaware that they aren't covered under property and liability policies.
• According to a Wall Street Journal article, small businesses are attacked at twice the rate of larger organizations, with data breaches increasing by 152% in the past two years.
• While many businesses are focused on pandemic recovery, supply chain issues, and inflation, cyber security often falls by the wayside.
• Small businesses may not realize they are not covered for cyber threats under standard policies, making it crucial to consult with insurance brokers for standalone cyber protection.
• Cyber insurance policies often include resources to help prevent attacks, making it proactive insurance—similar to fire insurance.
• Commercial business insurance typically excludes coverage for legal fees, infrastructure repairs, and other expenses due to cyber events.
• A real-life example: A Florida manufacturing company with cyber insurance was able to avoid a $2.4 million ransom demand after a ransomware attack, relying on backups and insurance coverage to cover expert fees and replacements.
• Another company in Maine suffered a loss of $250,000, but their insurance didn’t cover enough, leading to significant financial and emotional stress.
• While cyber insurance is essential, obtaining it is becoming harder, and prices are rising by 10-15% annually.
• Many companies are being turned down due to stricter underwriting requirements, such as multi-factor authentication and data encryption.
• Businesses that adopt strong cybersecurity practices before applying for insurance are more likely to get better policies at lower rates.
• Small businesses might also consider policies from "insure-tech" companies, which use AI to automate underwriting and assess cybersecurity risks.
• However, insure-tech policies often require continuous cybersecurity improvements to maintain coverage.
• Cyber insurance can be affordable, with premiums starting around $100 per month, but adhering to best practices is crucial for proper coverage.

Key Takeaways:

• Small businesses are increasingly vulnerable to cyber attacks due to insufficient security.
• Many businesses are not insured against cyber threats and may be unaware of exclusions in their current policies.
• Cyber insurance can help mitigate financial losses but is becoming harder to obtain and more expensive.
• Proper cybersecurity measures are essential to obtaining and maintaining good coverage.
• Regular review of cybersecurity practices is critical, especially when working with insure-tech companies.

 Description:

• Topic: Understanding Coverage Gaps in Business Insurance
• Example: A case study from Business Insurance Magazine where Travelers Insurance paid a claim of phishing under a crime policy, not a cyber insurance policy.
  • A company lost $600,000 due to fraudulent invoices emailed by an unknown actor to the purchasing manager.
  • The claim was paid under a crime policy but was denied under computer fraud coverage.
  • The company could have potentially received more money if the claim had been paid under a higher-limit cyber liability insurance policy.
• Key Points:
  • Differences between business insurance, liability insurance, crime insurance, and cyber liability insurance.
  • Importance of understanding which types of fraud are covered under different policies.
  • Ensure there are no gaps in coverage or at least be aware of where the risks lie.
  • Cyber liability insurance may fill in coverage gaps or overlap with other business insurance.
  • Understand exclusions in your insurance policies and consider adding endorsements or additional policies if necessary.
• Takeaway: As you prepare coverage for your business, be sure to understand the specific protections each policy offers and ensure you're not leaving any gaps that could expose your company to greater risks.

Overview of the Cyber Liability Insurance Application

• Explanation of a typical cyber liability insurance application.
• Paper-based example outlining key questions and required information.
• Understanding what insurers look for during underwriting.
• Key Information Required in the Application
  • Named Insured: Use your official company name as per corporate documents.
  • Website Domains: List all domains associated with your business.
  • Business Details: Provide physical address, industry, and number of employees.
  • Revenue & Profit: Estimated revenue and profit margins for the next 12 months.
• Critical Questions in the Application
  • Cyber Incidents: Disclosure of past cyber incidents or claims exceeding $25,000.
  • Encryption Use: Whether encryption is implemented on laptops, desktops, and other devices.
  • Data Collection & Processing:
    • Handling of payment card information (PCI) and personally identifiable information (PII).
    • Estimated volume of records for credit card transactions and sensitive data.
  • Backup & Security Measures:
    • Frequency of sensitive data backups.
    • Secondary validation for money transfers above $25,000.
• Legal & Compliance Considerations
  • Website & Social Media Complaints: Any past issues regarding website content or advertising.
  • Intellectual Property Protection: Policies for removing infringing content upon request.
• Technology & Industry-Specific Risks
  • Additional questions for companies in high-risk industries such as:
    • Cryptocurrency, Cannabis, IoT, Financial Services, Healthcare, Blockchain, Automotive, Military, Gambling, Payment Processing, Adult Entertainment, Legal & Medical Services.
  • Technology-Related Claims: Any disputes or claims exceeding $25,000 due to technology errors.
• Contracts & Risk Mitigation
  • Service Agreements: Percentage of services provided under written contracts.
  • Risk Mitigation Clauses: Common legal protections such as disclaimers, liability limitations, and customer acceptance clauses.
• Final Takeaway
  • Insurance companies use these questions to assess risks and determine policy eligibility.
  • Understanding the application process helps businesses improve cybersecurity practices.
  • Best practices like data backups, encryption, and contracts can impact coverage and premiums.

Tune in for an in-depth discussion on navigating the cyber liability insurance application process! 

Cyber Insurance vs. Other Business Insurance

• Cyber insurance is different from traditional business insurance.
• Reducing risk is crucial to securing a good cyber policy and protecting your company.
• The Importance of Proactive Security Measures
  • Having cyber insurance doesn't mean you should neglect security.
  • Just like fire insurance doesn’t justify setting fires, cyber policies shouldn’t be a fallback for poor security.
  • Protect your business from cyber threats before incidents occur.
• What Insurers Look for in Cyber Policies
  • Insurers assess your business’s risk level before offering coverage.
  • Strong security measures improve your chances of getting better coverage and lower premiums.
  • Some companies may reject applicants without adequate cybersecurity measures.
• Going Beyond Insurance Requirements
  • Implementing security controls before applying gives you a competitive edge.
  • Insurers may suggest or require additional protections, which will be easier to adopt if you’re already proactive.
• Why Cyber Insurance Is Essential
  • Businesses must demonstrate strong security controls to avoid high premiums.
  • Internal security policies help build a disciplined corporate culture.
  • Good security practices improve sales, revenue opportunities, and employee retention.
• The Impact on Employee Retention
  • Secure environments attract and retain high-quality employees.
  • Lack of security may drive away top talent while keeping less productive employees.
  • Strong cybersecurity policies create a stable, efficient, and profitable business environment.

🔒 Key Takeaway: Cyber insurance is important, but proactive security is even more critical. Strengthening your company’s cybersecurity practices can reduce risk, lower costs, and improve overall business operations.

🎧 Tune in now to learn more! 

 Importance of carefully reviewing your cyber insurance policy

• Many policies contain exclusions that limit payouts
• Cyber insurance differs from standard auto or homeowner’s policies
• Auto and homeowner’s policies are regulated and standardized
• Cyber policies are often excess and surplus lines, not regulated by the state

Major companies are adopting exclusions for catastrophic attacks

• This limits the risk companies can offset
• Companies may need to reevaluate their cyber insurance premiums

Tips for understanding your policy:

• Know exactly what is covered and what is not
• It’s important to understand the level of protection you're getting
• Consider whether a lower protection policy suits your needs
• Don’t solely rely on the advice of agents or brokers, as policies can vary between companies

Final advice:

• Seek guidance from a qualified insurance agent or broker
• Always read your policy carefully to ensure you're fully informed about the coverage

Description:

• The Importance of Cyber Attack Protection
  • The U.S. federal government is offering $1 billion to states to enhance cybersecurity.
  • This investment is in addition to the trillion-dollar infrastructure plan.
• Why Cybersecurity Matters
  • Protecting critical systems like rail networks, power grids, and water supply from cyber threats.
  • Ensuring people have access to heat, transportation, and essential services.
• Cybersecurity for Municipalities & Utilities
  • Municipal agencies and utilities can apply for grants to strengthen cybersecurity programs.
• Cyber Threats Go Beyond Government
  • Private companies and even wealthy individuals are being targeted.
  • A strong IT security plan, cyber insurance, or both can help mitigate risks.
• Follow the Smart Money
  • The federal government, backed by agencies like CIA, FBI, and NSA, understands the risks.
  • If they think it's worth investing $1 billion, it's worth considering what you should do to protect your assets.

🔒 Stay informed and take action—cybersecurity is no longer optional! 

 Description

• Relief is finally coming to the cyber insurance market.
• Many carriers and insurers are opening up their books, issuing more policies, and even reducing premiums.
• $50 million in new excess capacity is available for new insurers entering the cyber market.
• Some clients are seeing flat to declining rates after the overcorrections in 2021.
• Business owners may find cyber insurance rates easing and underwriting standards becoming less strict.
• If you had trouble getting a policy in the past, now is a good time to check again.
• Some excess and surplus lines policies may now qualify for admitted carriers.
• Deductibles may be lower, making coverage more affordable.
• Reassess your options with your broker to explore new coverages available for 2023.
• Previously restricted business categories may now have better access to cyber insurance due to increased capacity.

 In this episode, we discuss essential tips to ensure your insurance claims are processed correctly and paid out without issues. When filing an insurance claim, it's important to follow the right steps to avoid rejections or delays. Here’s what you need to know:

• Read Your Policy First: Before filing any claim, always read your insurance policy. Understand the coverage for the specific claim you're filing, whether it's for auto, windstorm, flood, or other types of damage.
• File the Claim Properly: Ensure you're filing the claim under the correct category and that it matches what's covered in your policy. Avoid filing claims for exclusions or for items that may fall under a different category.
• Understand Deductibles: Different claims may have different deductibles. File the claim under the correct category to ensure the appropriate deductible is applied.
• Document Everything: Take pictures of damages, collect estimates, and document all facts related to the claim. Accurate and detailed documentation supports the validity of your claim.
• Be Honest and Consistent: Avoid altering facts when filing your claim. Any inconsistency, even if accidental, could lead to the rejection of your claim. Stick to the same facts and ensure your statements remain consistent.
• Take Your Time: Don’t rush through the process. It may take extra time to properly document and file your claim, but doing so will increase the chances of it being approved.
• Title Search for Homeowners Claims: When filing a homeowner’s claim, insurers often perform a title search to verify property ownership and check for liens. Ensure that your records are up-to-date to avoid complications.
• Stay Consistent in Your Statements: The insurance company may ask the same questions multiple times or require you to fill out additional paperwork. Be sure your responses are consistent throughout the process.
• Be Prepared for Scrutiny: With large numbers of claims after a disaster, insurers may be extra cautious. Ensure your claim is clear, accurate, and fully documented to avoid the risk of exclusions or rejection.
• Work Within the Terms of Your Policy: Remember that your goal is to ensure the best possible outcome within the terms of your policy. Providing complete and accurate information is key to receiving the compensation you deserve.

By following these steps and understanding your policy, you can increase the chances of your insurance claim being approved without delays or issues. 

In this episode, we discuss:

• Whether victims of Ponzi schemes, scams, or online fraud can deduct their losses on their taxes
• How tax rules treat profits from fraudulent investments
• The IRS procedure for determining fraud-related losses (26 CFR Section 165)
• Why the timing of the fraud case matters for tax deductions
• Lessons from major fraud cases like Bernie Madoff and FTX
• The importance of consulting a tax professional for guidance
• Why you may need to file a tax extension in fraud-related cases
• The balance between asset recovery efforts and tax implications

Disclaimer: This is not legal or tax advice. Always consult a tax attorney or accountant for specific guidance.

Tune in now to learn how fraud losses can impact your taxes! 

Description

🔍 Investigating Fraud: Finding Deep Pockets for Recovery

In this episode, we discuss strategies for recovering lost funds in fraud cases by identifying third-party liabilities. Key points include:

• Primary Fraudster Assets: Recovering from the direct perpetrator (bank accounts, real estate, vehicles).
• Third-Party Liability: Exploring nominee trustees, banks, advertisers, and endorsers who may be held accountable.
• Legal Precedents:
  • Scott Rothstein Case: Banks held liable for administrative errors.
  • Bernie Madoff Case: Third-party claims led to full victim compensation.
  • FTX Scandal: Lawsuits against celebrity endorsers and corporate partners.
  • Jeffrey Epstein Case: Banks sued for allegedly enabling the crimes.
• Extending/Enabling Fraud: Legal theories that hold third parties accountable for negligence.
• Who Can Be Liable?: Accountants, salespeople, employment agencies, landlords, and even advertisers.
• Insurance Policies: Many third parties have insurance that may cover victim compensation.

💡 Key Takeaway: If you're a fraud victim, don’t just focus on the scammer—cast a wide net for potential recovery sources. Consult with a qualified attorney to explore all legal avenues.