Cyber insurance is not only recommended by compliance rules issued by the SEC and FINRA, but is a critically important layer of protection for every Registered Investment Advisor (RIA). In this article and video, we’ll cover the essentials of cyber insurance, its coverage, and its critical role for RIAs.
Cyber Insurance policies for RIAs are generally categorized into three key sections:
First, is the first-party insurance component which addresses immediate costs you incur due to a cyber incident, such as ransomware attacks or a data breach. This coverage supports expenses related to ransom payments, cyber extortion negotiation, operational disruptions, notification costs for breach victims, repair of digital assets, and data restoration efforts, among others.
Third-party insurance is the second component. It covers legal liabilities resulting from data breaches, here’s how. It’s a regulatory mandate to inform affected parties in the event of a breach, once parties are notified it often leads to litigation against the firm for failing to protect sensitive data securely. This portion of the policy covers legal defense costs, settlements, judgments, and regulatory fines.
The final portion of a cyber insurance policy for RIAs is cyber crime insurance which safeguards against financial losses due to fraudulent acts like social engineering and wire transfer fraud. There are finely nuanced differences in coverage across insurers, so working with a skilled broker here will help select an appropriate policy with robust protection. A point to keep in mind is that most cyber policies can only provide a maximum limit of cybercrime coverage to $250,000 which may be insufficient for many RIAs. This can be supplemented with a crime insurance policy.
So, how do you find the best cyber insurance for RIAs or a Registered Investment Advisor?
The quest for the “best cyber insurance policy” can be daunting, given the subjective nature of “best” and the dynamic landscape of the cyber insurance market. What’s considered top-tier now could soon be outmatched by new competitors entering the market or policy innovations.
In my view, the best cyber insurance for RIAs is one that is custom-crafted to align with your specific risk profile. This bespoke method can be attained by working with a skilled insurance broker, like The Coyle Group, who not only understands the various cyber offerings in the market but knows which underwriters are most interested in working with Registered Investment Advisors.
I don’t think you can get the best cyber policy through an online human-less contact portal. Filling in a few boxes of information is not going to result in tailoring a policy to your needs and may end up short-changing you where you need the most protection.
Beyond cyber insurance, we specialize in assembling full coverage solutions for RIAs, incorporating E&O an d D&O Insurance, Crime Insurance, Business Owners Policies and more.
As a business insurance expert I work with a wide variety of investment professionals and have a deep domain understanding of the policies you need and I’ll leave no stone unturned to find you the best solution at the most competitive premiums.
If you’re looking for high level expertise in a boutique client-centric setting why not give me a call or drop me and email and connect.
