Cyber Crime – How to Protect Yourself

By Remmie Butchko , CIC

Georgetown Insurance Service, Inc.

Silver Spring, MD

We have all experienced the many ways technology has changed how we go about our daily lives. For the most part, technological advances have resulted in positive outcomes.

Unfortunately, technological advances have also changed the way criminals steal, as well.

Historically, Crime Insurance policies have been written to cover businesses for theft claims such as employees stealing from the company, forgery of checks, and burglary/robbery of money or other property.

While these risks still exist with most businesses, Crime Insurance policies need to be restructured to address the new risks that advances in technology have brought to the criminal world.

A traditional Crime Insurance policy has 8 different components:

  1. Employee Theft – Loss of money, securities, or other property resulting from employee theft.
  2. Forgery or Alteration – Loss of money from forged checks, promissory notes, or other forged/altered documents.
  3. Inside the Premises – Theft of Money and Securities – Theft, disappearance or destruction of money inside of the business.
  4. Inside the Premises – Robbery or Safe Burglary – Theft or attempted theft from a safe.
  5. Outside the Premises – Robbery, loss or damage of money in the hands of a custodian.
  6. Computer Fraud – Use of computer to fraudulently cause a transfer.
  7. Funds Transfer Fraud – Use of fraudulent instructions to cause a transfer.
  8. Money Orders and Counterfeit Money – Loss resulting from accidental acceptance of counterfeit money or money orders.

It is surprisingly common for businesses to be covered by their existing policies for Employee Theft and Forgery/Alteration, but have no coverage for Computer Fraud or Funds Transfer Fraud. This just simply isn’t acceptable in today’s business world.

The majority of thefts today involve the use of a computer.  The verbiage of a typical Crime Policy reads that Computer Fraud consists of “the use of any computer to fraudulently cause a transfer” of money, securities or other property.  The word “any” in insurance policies is always a bit concerning, and in this case virtually everything we use on a daily basis is on a computer to some extent.  The policy does not say “any desktop computer,” it says “the use of any computer.”

We have also seen growth in Funds Transfer Fraud.  In fact, at our own agency we have experienced attempts to induce staff to transfer funds to other parties.  This is a growing area of theft.  Fraudulent instructions to transfer money can come by email (also known as CEO fraud or business email compromise (BEC) schemes), telephone, or a variety of written methods of instruction.  Every day the bogus emails look more-and-more legitimate, which makes businesses and their employees more vulnerable.  It is important to educate your employees on the threat of cyber-crimes and provide examples of what those emails or mailers may look like.

Additionally, talk with your IT department and/or 3rd Party IT vendor to discuss security options for firewalls, software updates, email filter controls, and data backups.

Let’s face it, Cyber Crime is the new wave of theft.  Not that Burglary or Robbery will ever disappear altogether (which means that coverage is still important to maintain!), but the risks of Cyber Crimes such as Computer Fraud and Funds Transfer Fraud have simply become too great for businesses to ignore.

Contact your agent or one of our agents today to discuss the different coverage options available to help protect you and your business.


Disclaimer: All data, information, and opinions provided on this article, newsletter, or blog is for informational and educational purposes only. While every caution has been taken to provide readers with the most accurate information and honest analysis, please use individual discretion before making any decisions based on the information in this article, newsletter, or blog. Georgetown Insurance Service, Inc. is not responsible if its readers happen to experience loss, injury, or damage resulting from its display or use. All information is provided on an as-is basis. This article, newsletter, or blog does not represent the thoughts, intentions, plans, or strategies of any specific Insurance Carrier, Georgetown Insurance Service, Inc. partner or affiliate.
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