Insurance Agents E&O Expands to Cover Cyber Failures

Every agent is responsible for comprehensive recordkeeping as part of their professional standards of conduct, right? Cataloguing conversations and email exchanges and even text and voice messages is difficult enough, but now the threat of cyber invasion looms. We often think of data breaches as cyber risk issue, but when it comes to professions that base their business on the collection, retention and distribution of personal or proprietary data, there could be an errors and omissions (E&O) exposure as well.

To respond, some companies are dovetailing cyber coverage into their agents E&O policies or programs. Small and midsize agencies are a particular point of concern since many are not as capable in cyber security as their deep-pocketed larger industry rivals. A standard E&O policy doesn’t typically cover cyber exposure, so a specialized program, policy or endorsement is probably needed, according to experts who spoke to Insurance Journal. Stand-alone policies might offer broader coverage or higher limits, but they would entail additional premium. Whatever the economics are, though, some kind of coverage is recommended by E&O experts.

Education and awareness are crucial to a comprehensive cyber exposure program. That can include newsletters, training and periodic alerts that remind agents to exercise caution.

E&O for agents that includes cyber coverage is complex, with no industrywide standardization, according to a Swiss Re Corporate Solutions executive who spoke to Insurance Journal. Different terms and conditions in policies and differing levels of technology and security in agencies mean one company’s coverage will be more or less effective for each individual agency, so what is recommended by a peer might not be what is most beneficial.

With ongoing advances in digital communications, cloud-based storage and mobile access to data records and increasingly aggressive and omnipresent hacking threats, insurance agents and their agencies need to reconsider their recordkeeping and data access policies along with their liability coverage. New products are being rolled out across the market, so finding an affordable option shouldn’t be difficult, a senior executive from the Professional Liability Center of Excellence tells Insurance Journal.

Helping customers to understand their role in the entire data-protection equation is also an important step that agents can add to their risk mitigation plan, experts say.