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

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