E&O Risk Management: Meeting the Challenge of Change

1. E&O Risk Management: Meeting the Challenge of Change Limiting Exposures to Data Breaches

2. INTRODUCTION Insurance agents collect, use, and store personally identifiable information on a daily basis Agents face exposure to both regulatory penalties and potential first and third party liability for breaches of data. Liability from cyber-attacks is on the rise and the media is constantly reporting on companies being hacked, exposing protected personal information.

3. INTRODUCTION Risks include physical risks, such as: • Discarding protected personal information without it being properly shredded • Computers, fax machines and printers being discarded without thoroughly removing stored personal information; • Physical agency break-ins where the entire agency server is stolen.

4. INTRODUCTION Perhaps the largest security risk arises from employee mistakes that often result from the failure to properly train them on agency procedures to protect the privacy of protected personal information.

5. GOOD BUSINESS & THE LAW Agencies have an obligation to secure protected personal information whether it is in electronic or paper form and to dispose of it appropriately

6. Data Breach ExposuresLegal Responsibilities Fair Credit Reporting Act (FCRA) Gramm-Leach-Bliley Act (GLBA) Health Insurance Portability and Accountability Act (HIPAA) Various state laws (at least 29 states) require reporting of security breaches…“Security Breach Notification Chart”:http://www.perkinscoie.com/statebreachchart/ These laws effectively require agencies to implement security plans, conduct training, and do security audits

7. Data Breach ExposuresData Breach Costs Average cost estimated to be $214 per record, or about $250K for the average agency • Direct Costs • Cost to handle breach…legal fees, consultants, implementing new technology and training • Cost to notify and remediate affected parties • Indirect Costs • Loss of trust of customers • Damage to reputation in the community

8. Data Breach ExposuresIdentify Data at Risk Paper files in cabinets and on desks in premises Archived files (paper and electronic) outside premises Computer hard drives, laptops, cell phones, CDs, USB drives, agency management system providers, carriers, call centers, etc.

9. Data Breach ExposuresIdentify Physical Threats Majority of breaches occur from stolen or lost devices Secure the building, server room, and file cabinets Screen cleaning crews Immediately prevent access to data when employees leave Practice sound password security Limit personal information on mobile devices

10. Data Breach ExposuresIdentify Virtual Threats Firewall Secure WiFi connections Virus and malware protection Secure data backups and archived files Connect remotely via SSL/VPN connections Use secure SSL connections (https) to collect data Secure email with Transport Layer Security (TLS)

11. LIMIT YOUR RISK Only keep the data you need and for only the length of time that you need it Have written guidelines and training regarding employee use of all protected consumer information Have written mandatory procedures in place for the proper disposal of sensitive information.