What’s the Role of Cyber Insurance in Your Business?

You wouldn’t dream of operating your title company without basic business protections such as insurance against errors and omissions (E&O) or other potential liabilities. Insurance protects your business from the risks that could occur during the normal course of business.

But what about the risks of a cyberattack and the devastating financial and reputational damages it could bring?

Although losses vary based on the type and scale of cyberattacks, cyber insurance has become an important tool title companies can use to provide coverage for the losses and recovery costs in the months that follow an event. In fact, according to Fortune Business Insights, the global cyber insurance market size was valued at $13B in 2022 and is projected to reach $84B by 2030, at an annual growth rate of 26%.

This rapid growth of the cyber insurance market directly correlates with the increasing frequency and severity of cyberattacks and the growing awareness of the need to protect against these risks.

That’s why it is more important than ever to understand what cyber insurance is and how to find the right policy to protect your title company and its reputation.

The power of cyber insurance: A key weapon in the digital battleground

In today's digital world—in which cyberattacks are growing in frequency and sophistication—title companies face severe risks, ranging from the loss of sensitive customer data, to mortgage payoff fraud. These incidents can lead to expensive lawsuits, high clean-up costs, and severe reputational damage. 

By investing in cyber insurance, title companies can gain protection against:

• Legal fees incurred in litigation following a cyberattack
• Victim notification costs
• Credit monitoring expenses
• Data restoration and recovery costs

With cyber insurance, you can navigate the digital landscape with confidence, knowing your title company will be prepared to recover from potential financial and reputational damages that cyberattacks can bring.

3 key things title companies need to know about cyber insurance

Although cyber insurance can offer title companies many advantages and support, it still has limitations. Here are three things to keep in mind as you do your research:

1. Cyber insurance is not a silver bullet.

Cyber risks are constantly evolving, so insurance policies must be reviewed regularly to ensure coverage matches a company’s needs. Similarly, although cyber insurance provides valuable financial protection in the event of a cyberattack, title companies need to understand that it is not a one-size-fits-all solution or silver bullet. 

Your title and settlement company should work closely with an insurance provider to stay informed about the latest cyber threats and determine if your coverage includes relevant risks. For example, business email compromise (BEC) incidents might be covered under a crime policy, not cyber insurance, depending on how the attacker gained access.

2. Cyber insurance coverage can vary.

Not all cyber insurance policies are the same, so you should work with experienced insurance agents to customize coverage to your unique needs. 

A trusted insurance agent will work with your title company to assess its specific cyber risks and tailor the policy accordingly. Once a potential insurance product is selected, it is important to carefully review the policy to understand what is covered and what is excluded. 

In addition to cyber insurance and depending on your risk profile, your title company may want to consider other policies, such as crime or professional liability policies. These can complement cyber insurance and provide a more comprehensive risk management approach.

3. Coverage often comes with requirements.

Cyber insurance policies often come with requirements that businesses must meet to maintain coverage. 

For example, insurance providers may require title companies to have implemented robust cybersecurity measures as a condition for coverage. These measures can include:

• Using multi-factor authentication
• Encrypting sensitive data
• Providing regular employee training on cybersecurity best practices
• Maintaining up-to-date security software

Failure to meet these requirements could result in the denial of a claim when an incident investigation is underway.

Cyber insurance for real estate use cases: PayoffProtect

Although cyber insurance is an important financial safety net for title companies in the event of a cyberattack, it doesn't address the reputational damage that can occur or replace the need for secure business processes.

Most notably, title companies and your clients are frequently targeted by other types of threats during the closing and mortgage payoff process. To mitigate the risks associated with fraudulent wire transfers, title companies are turning to products like CertifID's PayoffProtect, which provides a secure, independent, and reliable method to validate wire transfer instructions, reducing the risk of fraudulent transactions. CertifID products also include up to $1M in direct insurance for every validated transaction, providing an additional layer of protection.

By combining cyber insurance coverage with fraud protection products like PayoffProtect and implementing strong IT security practices, your title company can enhance its overall security posture and be protected against major cyber risks. 

Want to take your understanding to the next level? Download our latest cyber insurance whitepaper below.
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