Cyber Liability Insurance Is Not an Option Anymore
By Muhannad A. Malki.
Social Service agencies (both for profit and non-profit) working via contract with various Regional Centers and/or DMH (Department of Mental Health) are now being contractually obligated to carry Privacy/Cyber Liability Insurance. This has been a naturally progressing inevitability as Cyber risks and exposures continue to grow. Additionally, California recently enacted the California Consumer Privacy Act (CCPA), which is widely considered the most aggressive in the nation, and these agencies do not want to be left holding the proverbial bag.
What the Regional Centers are requiring:
We have seen certain Regional Centers require a $1,000,000 limit per occurrence and $3,000,000 in the aggregate. The word Cyber had been inconspicuously added to an existing clause on a new contract without a specified limit and you would have to ask for clarification. Many, if not most, vendors are out of compliance from an insurance standpoint. Beyond securing the insurance, it is advised to formulate and implement internal policies and procedures to address this as there are also HIPAA components and considerations.
What DMH is requiring?
I recently completed a new contract review for a non-profit social service agency with DMH and they are requiring a $10,000,000 limit – this is not a typo. Yes, Ten Million Dollar limit! There are 3 components of coverage they are looking for:
1. Privacy Breaches 2. System Breaches 3. Denial or Loss of Service
In addition, the policy (ies) may NOT have any exclusion or restriction for unencrypted portable devices/media. I am referencing “policies” as a $10M limit is not normally achievable with one carrier. Completing this transaction typically includes two or three underwriters/carriers. This is a big jump in compliance for many vendors in this space and we are here to help. At IOA, we make the complex simple.
** Insurance Office of America (IOA) is a full-service insurance agency founded in 1988 and one of the fastest-growing independent agencies in the United States. IOA is ranked 12th on Insurance Journal’s 2017 Top 100 Independent Property/Casualty Agencies report and 23rd on Business Insurance’s 2018 100 Largest Brokers of U.S. Business list. IOA has more than 1,200 associates located in over 50 branch offices in the U.S. and London. M. Malki has been advocating on behalf of his clients to help manage their risks for over 24 years.
Muhannad A. Malki – Risk Management Specialist – IOA Insurance Services
16000 Ventura Blvd. • Suite 550 • Encino, CA 91436
(323) 318-8821 Phone • (323) 951-4260 Fax • www.ioausa.com • CA License #0E67768