Phone hacking. Password hijacking. Virtual identity theft. With new technology comes new challenges, and online security threats are chief among them. When it comes to protecting and insuring the privacy of one's residents, it's imperative that co-op and condo administrators know the stakes and take appropriate steps—not only for the sake of their residents and clients, but for their own as well.
Data for the Taking
A number of high profile data security breaches have made the headlines in recent months, affecting major companies such as Sony, Epsilon, Honda and Michael’s stores. Epsilon, the world’s largest permission-based email marketing provider, experienced a massive data security breach, affecting a substantial portion of their high profile Fortune 50 clients. Earlier this year, Honda announced that a breach in their data security exposed over 250,000 records of their car owners. And, more recently, it was reported that multiple data breaches at Sony had affected tens of millions of Playstation customers.
While new data breaches seem to be hitting the news weekly, there are many more attacks happening each day to smaller companies that are not making the news.
Verizon reports that 50 percent of cyber attacks were on companies with fewer than 1,000 employees. Companies with 11 to 100 employees sustained 26 percent of all attacks. Nobody likes these odds.
According to Seaman, a senior vice president at HUB International, every real estate management company, co-op and condo building owner that houses employee, resident and/or tenant social security numbers, credit card details, bank account information and other private information, in the cloud or on an on-site server, has an obligation to understand the protective measures, compliance requirements and costly implications of data security breaches.
The failure to protect private data and records from hackers and rogue employees can lead to lawsuits, ethics rule violations, reputational damage and substantial notification/monitoring costs.
A buyer, seller, mortgage lender, real estate agent, landlord or tenant involved in any type of real estate transaction has specific rights and responsibilities when it comes to securing an individual's personal information, especially when a person’s name is associated with a social security card number or driver’s license number within a given record. Generally, the NY Security and Notification Act requires businesses and state agencies, upon discovery or notification of a security breach in their computer systems, to notify any New York resident whose personal information, including real estate records, has been acquired, or is reasonably believed to have been acquired, without authorization.
A company laptop that is stolen or forgotten in a taxi can launch a long and costly nightmare involving theft or extortion. While it is estimated that roughly two thirds of all major security breaches are a result of the loss or theft of portable devices or media, many businesses do not have insurance that covers these risks.
According to the 2009 FBI Computer Crime and Security Survey, 71 percent of American companies endanger their financial stability by not having insurance that will cover Internet liability. More than ever, it is vital to make sure your company is protected.
DeLucia, a senior vice president at HUB International and a real estate insurance specialist, notes that most standard business insurance policies include general liability, which protects the policyholder in case of a suit resulting from injury or property damage. However, stand alone coverage may be needed for protection against security breaches involving data on properties, tenants and financial transactions.
Cyber Insurance Available
Good news: Cyber liability insurance is easily tailored to the needs of the real estate industry. Whether you are more concerned with networking security, privacy issues, crisis management or media and intellectual property issues, you can work with an underwriter to find a plan that best covers your greatest risks.
Better news: The insurance is affordable. A typical $100,000 policy for a small business costs can cost as little as $300 annually. That is a small price to pay, especially compared to what a successful suit could cost, not only in damages, but also in time, stress, lost business, and tarnished reputation.
As your company grows and succeeds, savvy business people understand that a higher profile equals higher risk. Look at your old insurance and make sure it is growing with you. Chances are you have left yourself too vulnerable for comfort in today's cyber business world. The Internet with all its risks and rewards is here to stay, and success brings with it the responsibility to navigate new terrain safely.
To identify and better understand the risks your business and properties may face as well as address specific questions you may have regarding your current coverage, contact us at our New York City or Woodbury, Long Island offices at www.hubinternational.com.
Alex Seaman and Frank DeLucia are senior vice presidents at HUB International.