An Ode to the Fake ID: Identity Theft, Data Breach and Cyber Liability

I’ve lived in either Wisconsin or Minnesota my entire life.  However, during different periods in college I actually grew up in Oregon and South Dakota as well.  I couldn’t tell you the names of the towns in either state that I purportedly lived in now, but I sure knew them back then.  I also knew the liquor stores and bars that weren’t real careful when they checked IDs (with the exception of one fateful day when I had to give up my Oregon residency and take up South Dakota).

It seemed in college there was always a guy who could hook you up with a bad fake ID for the right price.  No one was ever hurt while we were out having a good time, and they served their purpose for a few years.  Was it illegal?  Absolutely, and it was also very dumb for a guy majoring in Criminal Justice with full intentions of becoming a peace officer.   I’m not going to talk right now about the importance of training your bouncers, checking IDs or liquor liability.  What I am going to scratch the surface on is the up and coming threat of data breach, identity theft and cyber liability.

While our guy in college may not have been very sophisticated, today’s identity thieves are and have gotten very good at what they do.  It seems just about every week we hear about a large data breach – Target before Christmas and Ebay more recently.  What we don’t often hear about is some of the attacks on small or medium sized businesses.  78% of small and medium sized businesses experienced a data breach in the past two years.  Every year, cybercriminals steal $1 billion from these businesses in the U.S. and Europe.  And of those that suffer a major data loss, 72% shut down within 24 months.

Not all of these data losses were the result of a data breach.  Some were the result of poor backup procedures, but many of them were.  And unfortunately for you, their guy is a lot more sophisticated than our guy was in college.  With our world being more interconnected than ever, there are more and more ways where they can steal your information.  Point of sale computers.  Credit card machines.  Online databases.  Physical breach of confidential records in storage.  Employment records.  Hacking into your computer or mainframe.  Your smart phone.  Online payment systems.  The list goes on.

So how do you fare?  What are your true exposures?  For most people, when they hear data breach they only think of cyber liability.  Cyber liability is very important for many businesses, but it’s also important to understand what your coverage actually entails.  While many businesses may not have a true cyber liability exposure, they still face the possibility that confidential information could be compromised.  It could be by a current employee in good standing.  It could be someone breaking into your business.  Disgruntled employee.  Or it could be someone you know and trust and would never expect.  Regardless of who is a suspect, it is a very real threat to businesses today.

While the cyber liability may not apply in these situations, data breach does and could be used to cover a claim.  It’s important for you to know that coverage is available, it covers a huge exposure, and not all things are created equal.  Even if you do not have the online presence that many businesses do today, you still could fall victim to one of these very sophisticated, 21^st century criminals.  It’s important to know what your policy does and does not cover.

Identity theft is a much more lucrative business than selling fake IDs to college kids, and it’s here to stay.  The best thing you can do is take steps to prevent a breach, and in case it does happen, making sure you have the coverage you need to ensure your business’s survival.  Good luck!

Andy Bertram CPCU, ARM-E
abertram@cobrown.com
651-800-6173

What's In a Name?

I used to work at an ice cream factory, and the difference between Lick’n Good, Zurheide’s, and Old Wisconsin vanilla ice cream was nothing more than the packaging we put it in and the price we charged.  I’m firmly convinced the coffee companies do the same thing.  To prove my theory, I experimented several years ago with some of my old roommates.

I love a good cup of coffee.  There’s just something about waking up to that sweet aroma that gets me going every day.  I think Folgers was onto something.  To the dismay of my wife and friends, I also enjoy a bad cup of coffee.  Have you ever had reheated coffee?  Broke down and made a cup of instant “coffee”?  Enjoyed a cup after it’s been sitting on the burner all day?  Yes, yes, and yes for this guy.  Even so, I can still tell the difference between a good cup and a bad cup.

In our house, we’d burn through a can of coffee about every week and a half.  I was adamant that the generic Columbian roast tasted just like the name brand.  Since we all split the cost, I bought the generic one time and never heard the end of it.  It “didn’t taste right” and “just wasn’t as good”.  After that fiasco, we went back to the name brand coffee and all was good in the world.  Or so they thought.  Somewhere between opening the new can and the end of that new can, I bought the generic brand and filled the brand name can back to the top.  And as I heard, you would never believe how good the “brand name” coffee tasted in comparison to the stuff I bought!

Let’s switch gears to you business.  If you produce a product or offer a service similar to your competitors, why do your customers buy from you instead? Have you won awards?  Are you known for providing the best widget or building the best home?  If you’re a trucker, do you have a top notch safety record and history of being reliable and always delivering on time? With all the similar options available, why should I buy from you?

Often, it’s your name and reputation.  If you’ve taken over an existing company, they have been molded and crafted for generations.  Or if you are a startup, yours are still fairly fresh in comparison.  It takes a long time to build a solid name for yourself or business, but it can take just an instant to take all that goodwill away.  What have you done to protect your name or your image?  If you’ve lost that good name, what would it do to your revenue?

Ryan Braun.  ENRON.  Anthony Weiner.  AIG.  Alex Rodriguez.  Pete Rose.  Exxon.  Washington Mutual.  Martha Stewart.  The Dixie Chicks.  What is the first thing that comes to your mind as you read these names?  1) Cheater.  2) Fraud.  3) Sexting.  4) Bailout.  5) Cheater.  6) Disgraced Gambler.  7) Exxon Valdez environmental disaster.  8) Fraud.  9) Insider Trading.  10) Unpatriotic has-beens. 

I’ll bet you didn’t even consider all of their accomplishments or their history prior to the one day that sticks in your mind.  And that’s the point.  There are a lot of thriving companies out there who have built a solid reputation over the years.  Luckily for Exxon, they eventually recovered after years and years of PR work and trying to rebuild their reputation.  I’ll bet it wasn’t easy, especially with how the oil companies are vilified in today’s society.

Think about your current situation.  What would a poor decision, mistake, or bad PR do to your company?  If you don’t have a PR recovery plan in place, it’s probably time to start thinking about it.  Good planning is good business, and it would be foolish not to consider the impact that unexpected bad press could do to your business.  You buy insurance on your building to protect it in case it would be destroyed, and this isn’t very probable.  Bad press is more likely, and it could cause you to lose significant revenue including possible failure of your business.   

I was born with it.  It defines who I am, and my dad and those before him made it strong.  It takes a lifetime and generations to build a solid name, and seconds to lose it.  The Bertram name does not have a price tag.  So I’m going to keep it how I got it, as solid as it came.  It’s my last name.   Can the same be said about yours?

Andy Bertram CPCU, ARM-E

Risk Advisor

C.O. Brown

651-800-6173

abertram@cobrown.com

"The Entitlement Generation" and Keeping Good Employees

The best defense is a good offense.  Most of us have heard that phrase used in one way or another.  It originally applied to military combat, but it’s become cliché in the sports world today.  It's simple - by staying actively engaged in pursuing your competition, you’ll spend less time defending yourself.

Your business isn’t in a combat zone, but this phrase can apply to one of the biggest risks facing it today – your employees. I have the same conversation with business owners like you just about every day.  Their business has a solid core of employees in their 40’s and 50’s, but they’re having a tough time attracting younger talent.  Those they do do find are often unreliable and do not have the work ethic of their more experienced employees.  Let’s dissect this a little further.

The millennial generation is a far cry from our baby boomers parents.  Our well-intentioned parents worked hard so we could be better off than they were growing up, but it has led to some unintended consequences.  We should almost be referred to as the “entitlement generation” because it seems many of our peers feel entitled to just about everything these days. 

In our parents’ quest to give us a better life, many in our generation did not learn the value of working hard because things they wanted were simply handed to them.  Whether it’s free healthcare or free tuition, they have become accustomed to getting something for nothing.  They've sadly become the quintessential basement dwellers of their parents’ homes, staying on their parents’ health plan until they turn 26 because they don't have a real job, and playing video games in all of their spare waking hours instead of trying to find a way to get out on their own.

For those of us millennials whose parents taught us the value of hard work, this is baffling.  Chances are if you’re reading this blog, you aren't living in your parents' basement.  While it presents additional opportunities for those of us willing to work hard, it also causes some issues when we get into positions of running a business and needing to hire reliable employees.  That brings me back to my original point – the best defense is a good offense.

All things considered, it usually costs a lot more to hire a new employee than it is to retain a good one.  Whether it’s money for job posting, training, and lost productivity while that new employee gets to the same level as the former employee (plus many others), it won’t be cheap.  Did I forget to mention that this person who you have just hired may fall into the “entitlement generation” category?  And if they do, guess what you’ll be doing in a few weeks or months… (see above).  Sometimes you have to hire because of growth or opportunity, but I’ll save that for another day.

If you haven't already, now's the time to go on the offensive to keep your employees happy.  What type of benefits are you currently offering?  Are there any incentive programs?  Wellness?  What other perks are available for your workers?  Are you doing more than your competitors?  When was the last time you offered a raise or a bonus for a job well done?  All things considered, wouldn’t it be less expensive to do one or two of these things a year than to try and replace your best workers?

You and I show up every day because we either love what we do, enjoy our work environment, or we are working hard for a greater cause.  Be it our family, ourselves or a future opportunity, we’re here because we want to be.  Put yourself in your employees' shoes – what gets them up in the morning and excited to come to work for you?  If you can’t answer that question honestly, then it’s time for a gut check. 


Go on the offensive to keep your employees happy, and save yourself the added headaches and expenses that comes with replacing them.  It's a worthy investment in the future of your business.


Andy Bertram
Risk Advisor
abertram@cobrown.com
651-800-6173

Don't Be "That Guy"

On February 14, 2013, I was “that guy”.  You know who I’m talking about.  It was pouring rain, 33 degrees and flirting with freezing.  I had a five hour drive ahead of me that was looking like eight, needed to be home in six hours, and I was on a mission to make up some lost time after a late start.  A little earlier in the trip I noticed that my tires had lost a little grip on the road, but being invincible that didn’t deter me.  I just let off the gas and watched the speedometer drop about five ticks lower than normal.  No big deal.

After getting off the state highway and onto I-94, it only made sense to make up for some lost time.  I was west bound and down, passing cars left and right.  Now I was in full “that guy” mode.  You know, that guy you all wish would either a) wind up parked on the side of the road with blue and red lights flashing behind it; b) down at the bottom of a ditch, far enough to not drive out but not bad enough to get hurt; or c) all of the above. 

It just so happened that somewhere between Mauston and Osseo the temperature dropped a few degrees.  My car doesn’t have a temperature gauge, so I first noticed the temperature drop when we were flying backwards down the interstate at about 60 MPH.  I suppose the rain turning into snow was a dead giveaway, but I didn’t really notice it until we were parked safely at the bottom of the aforementioned ditch.

So all of those who were rooting for option “c”, they got their wish.  The WI state patrol is thicker than mud in the Mississippi, so we had a trooper there within seconds for a very unpleasant experience.  I got the last laugh though and somehow managed to drive the car out of the ditch without getting a “too fast for conditions” ticket.  Me = 1, other drivers = 1, state patrol = 0.  We’ll call it a draw.

If you’re like me on most days, it seems like “that guy” who flies by you on the interstate always gets away.   The same goes with insurance as well.  Fraud amounts to roughly 10% of all property and casualty claims paid in the U.S. each year.  Whether it’s stretching out a work comp injury, adding some fluff to a property claim, or exaggerating damage from an auto accident, all of these add up throughout the year.  Many people consider these things harmless and find ways to justify it to themselves.  In reality it’s illegal, and the costs are getting passed on to you and me.  Believe it or not, the insurance companies are not charity organizations.  They are there to make a profit, and if their costs are going up they will look to their policyholders to make up the difference.

When was the last time that you heard about someone getting caught?  Well I came across this example today and thought I’d share.  http://www.insurancejournal.com/news/midwest/2014/04/23/327127.htm.  In a nutshell, an Ohio woman was ordered to repay more than $32,000 in connection with working while collecting workplace injury benefits.  She got her hand caught in the cookie jar, and she could wind up spending some time in the big house as well.  She’s not the first and certainly won’t be the last to cheat the system, but it’s nice to see that every once in awhile the bad guys get caught. 

“That guy” will keep getting away with it unless we all work together to put an end to the problem.  So the next time you hear of someone who may be playing the system, stretching a claim or double dipping, speak up.  Insurance fraud affects us all, and we all wind up paying for it in the end. 

Andy Bertram CPCU, ARM-E

Risk Advisor
C.O. Brown
Phone: 651-800-6173
abertram@cobrown.com