Cyber Insurance Social Engineering Risks and Protection

Cyber insurance social engineering risks and protection are a top concern for businesses and individuals alike. Social engineering attacks can result in significant financial losses.

Phishing attacks, a common form of social engineering, can be devastating, with 76% of organizations experiencing a phishing attack in 2020, according to a report. These attacks often involve emails that appear to be from a legitimate source, but are actually designed to trick victims into revealing sensitive information.

Businesses can protect themselves by implementing robust security measures, such as employee training and regular software updates. This can help prevent social engineering attacks and minimize the risk of financial losses.

A robust cybersecurity plan can also include measures such as multi-factor authentication and encryption, which can help protect sensitive information from being accessed by unauthorized individuals.

Phony Client Scams are a type of social engineering attack where fraudsters target entities holding client funds, like lawyers or financial institutions, and instruct an employee to wire funds to a new account.

These scams are getting sophisticated, with fake instructions often appearing authentic, even when the employee attempts to verify them. The targeted entity may then turn to insurance to be indemnified for the lost money.

Vendor Impersonation Scams involve a fraudster impersonating an existing vendor and asking an employee to change the vendor's banking information. This scam is becoming increasingly sophisticated, with the fake vendor sometimes sending a second set of instructions as confirmation.

Executive Impersonation Scams occur when a fraudster impersonates an authority figure, such as a CEO, and sends instructions to an employee via email or phone asking for funds to be wired to an account for a "special" situation. The instructions often convey urgency and confidentiality.

Business Email Compromise (BEC) attacks are the most common type of social engineering attack, where malicious actors exploit vulnerabilities in a client's system to dupe employees into moving money into a fake account. Hackers may sit on the client's traffic, identifying key players, habits, and language, to use in the scam.

Phishing is a widespread form of social engineering, where an attacker sends an email or text message that appears authentic but is actually intended to trick the recipient into clicking fake links or disclosing sensitive information.

Cyber insurance coverage can be a bit confusing, but I'll break it down for you. Some cyber policies offer an extension for Fraudulent Instructions or similarly labeled coverage, which can help protect against social engineering fraud. However, there's an ongoing debate in the insurance industry about whether cyber policies should cover these types of losses.

To make things more complicated, coverage under a cyber policy may not always provide the same benefits as a crime policy. For example, extra expense coverage for investigating, determining, and proving the loss, losses where the fraudster has colluded with an employee, computer fraud transfer coverage, and fund transfer fraud coverage may not be included.

Here are some key questions to ask about the coverage and exclusions in a cyber insurance policy:

Cyber insurance is a type of insurance that protects businesses from financial losses due to cyber attacks, data breaches, and other cyber-related risks.

The cost of a cyber attack can be staggering, with the average cost of a data breach being around $3.86 million, according to a study cited in our article.

A cyber insurance policy typically covers expenses such as notification costs, credit monitoring services for affected customers, and forensic analysis to determine the cause of the breach.

Cyber insurance policies can also provide coverage for business interruption, which can be a significant financial loss for businesses that are unable to operate due to a cyber attack.

Some cyber insurance policies may also offer optional add-ons, such as coverage for cyber extortion, which can help businesses recover from ransomware attacks.

Does Cyber Insurance Cover Social Engineering Fraud?

Cyber insurance policies may offer coverage for social engineering fraud, but it's not always a guarantee. Some cyber policies offer an extension for Fraudulent Instructions or similarly labeled coverage.

This coverage can be a natural fit for cyber insurance policies since criminals often use electronic systems to execute scams. However, there's an ongoing debate in the insurance industry about whether cyber policies should cover these losses.

To ensure you have adequate coverage, it's essential to coordinate your coverage between crime and cyber insurance policies. This may involve purchasing coverage under both policies to broaden the scope of coverage.

Here are some key differences between cyber and crime policies:

By understanding the differences between these policies, you can make informed decisions about your insurance coverage and ensure you're protected against social engineering fraud.

Funds Transfer Fraud can be devastating for individuals and businesses. It's a type of cybercrime where attackers trick victims into transferring money to their own accounts.

According to the article, in 2020, a phishing scammer managed to trick a victim into transferring $500,000 to an offshore account. This type of scam is often carried out through email or phone calls that appear to be from a trusted source.

Attackers often use social engineering tactics to gain the trust of their victims, making it difficult to detect the scam. In one case, a victim received an email from what appeared to be their bank, asking them to verify their account details.

The article highlights that funds transfer fraud is a common type of cybercrime, with losses totaling $1.8 billion in the United States alone in 2020.

Protecting your business from social engineering attacks requires a multi-faceted approach. It only takes one person, one hasty decision, or one click for an entire security system to be compromised.

Employee education and training are crucial in preventing social engineering fraud. Train all employees to recognize social engineering tactics and instruct them on how to respond. Create a way for people to report any suspicious activity to detect attack attempts early.

Strong authentication measures are essential in protecting accounts. Require employees to use strong passwords that aren't shared between services and that are changed regularly. Multi-factor authentication (MFA) should be required on all accounts.

Regular patching and updating of software and systems can prevent attacks from advancing further. This is especially important if social engineering is the entry point for a broader cyber attack.

Monitoring and analyzing network activity can help unmask incoming attacks or shut down attacks in progress. This can be done by studying suspicious activities and identifying emerging patterns.

To make your organization more resilient to social engineering attacks, consider the following 5 ways:

Technology controls, such as multifactor authentication (MFA), play a vital role in defending against social engineering attacks. However, preventing cyber criminals from obtaining any authentication component is the best defense.

Insurance is also a key part of risk mitigation, and there are several coverage options for social engineering exposure. Consider the following types of policies:

Each type of policy has its own considerations and limitations, so careful examination is required to compare coverages. Stand-alone social engineering solutions may provide the best solution for providing additional capacity for social engineering losses.

The impact of cyber insurance social engineering is far-reaching, affecting industries and coverage lines across the board.

Silent cyber, a type of cyber risk, can quietly seep into an organization's operations without being detected, making it a significant concern.

This type of risk is not limited to specific industries, as it can affect any organization that relies on technology.

The information contained in insurance policies about cyber insurance social engineering is for general guidance only and not intended to provide legal advice.

Telecommunications Fraud Loss is a significant concern for businesses worldwide. Hackers can invade a company's phone networking system, resulting in huge phone bills.

This type of fraud can be achieved through the company's computer network or the telecommunications service provider. Companies can incur massive losses due to these unauthorized long-distance calls.

A joint report by Europol's European Cybercrime Centre and Trend Micro found that these unauthorized long-distance calls cost companies around the world about $32.7 billion a year.

Silent issues can be a major problem across various industries. This is evident in the realm of insurance, where "Silent Cyber: An Issue Making Noise Across Industries and Coverage Lines" is a pressing concern.

The issue of silent cyber is not limited to a specific industry or coverage line, it's a widespread problem. Every policy has different policy language, which means that coverage afforded under any insurance policy issued is subject to individual policy terms and conditions.

It's essential to refer to your policy for the actual language, as views expressed about insurance policy language are only descriptive and not intended to provide legal advice.

Partnering with experts can make all the difference in protecting your business from cyber threats. Amwins has partnered with industry leaders in cyber and crime insurance to provide expertise and access to specialized solutions.

Having a partner with industry-leading data and analytics capabilities can help you stay ahead of potential threats. Amwins has this expertise, which can inform your risk management strategies.

By partnering with Amwins, you can take advantage of preferred pricing agreements with top cyber security service providers.

Partner with a leader in cyber and crime insurance. Amwins has the expertise and capabilities to help ensure your clients are well protected.

Amwins has established preferred pricing agreements with industry-leading cyber security service providers. These partnerships can help insureds improve their risk profile while better protecting their businesses against a broad range of cyber threats.

Amwins has access to stand-alone social engineering solutions as well as international capacity. This means they can provide comprehensive protection for clients facing cyber threats.

Amwins' data and analytics capabilities are industry-leading, giving them a unique understanding of cyber threats and how to mitigate them.

At-Bay is the InsurSec provider for the digital age, combining world-class technology with industry-leading insurance and security expertise.

Their InsurSec approach provides end-to-end protection for modern businesses, acting as a force multiplier that includes security, threat intelligence, and human experts to close the SMB cybersecurity gap.