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Cyber Fraud: Whats Happening Now?
Medical Information and the Latest Big Data Theft Reports

Cyber Fraud: What's Happening Now?
Medical Information and the Latest Big Data Theft Reports

Those of you who follow this blog may know that I have special interest in the insurance aspects of cyber fraud. We tend to think of insurance risk in the commonplace categories of property loss and personal or business liability. But with our exponentially increasing reliance on computers and the internet, and with the ever-expanding aggregation of personal and business data, often in locations uncontrolled by or even unknown to us, we need to rethink where risk really lies -- and how insurance can be employed as a tool to mitigate that risk.

I have no deep solutions to offer to these problems in this blog entry, but want to pass along to those of you with similar concerns some recent news items:

Stolen Medical Data More Valuable than Stolen Credit Card Data. Experts estimate that stolen medical credentials can be sold in the black market for $10 each. That is 10 to 20 times more than the value of a stolen credit card. Stolen medical credentials can be used to fraudulently obtain or bill for services or products. And unlike with credit card theft, often the person whose information is stolen will not realize for quite some time that his data has been stolen and is being misappropriated. This sort of theft is on the rise. Forty percent of healthcare organizations reported criminal cyber attacks in 2013, compared with twenty percent in 2009. And, of course, the increasing use of electronic records by the healthcare industry creates more targets for ambitious cyber thieves. Of course additional security steps can be taken to protect this data, as the banking industry and the large chain stores have painfully discovered. But so far the healthcare industry record on cyber security appears to be spotty. 

Another Restaurant Chain is Cyber-Attacked. Jimmy John's sandwich restaurant chain announced a security breach involving customer credit and debit card data at 216 of its stores and franchise locations. Compromised data included credit/debit card numbers, and in some cases the holder's name, and the card's verification number and expiration date. The breach occurred when the perpetrator obtained log-in credentials from Jimmy John's vendor and then used the credentials to access point-of-sale systems at some store locations over the course of the summer. Due to the nature of the breach, only cards swiped at a point-of-sale were at risk, not cards used on-line or for which the information was manually entered. The company has brought in forensic experts to help understand and deal with the breach.

Rising Coverage Limits. Companies that are heavy users of credit and debt cards, such as large chain stores, have had to rethink their insurance coverage for cyber theft and related liabilities. Home Depot recently announced that a breach of its security could impact customers using payment cards in its U.S. and Canadian stores, but also indicated that there was no indication that customer PINs had been compromised. In related news, industry sources report that Home Depot carries $110 million in cyber coverage. Such a figure would have been unheard of only a few years ago. The question is whether it represents a new baseline or is just a stopping point on a steeply rising curve.  

For all of your personal or business insurance needs, contact Alex Pfeifer, Pfeifer Insurance Brokers, at 650 762-8070 or alex@pfeiferins.com.  

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