In the age of regular data breaches and threats of future cyberattacks, no business is safe from the prying hands of sophisticated hackers, especially if it holds a significant amount of personal information, like companies operating in the real estate sector.
“With the advances in technology, the aggregation of data by insureds has really increased dramatically,” said James O’Neill, who runs the cyber liability program for New Empire Group. “Where people used to have paper files, now they can store thousands of names in a computer. With the definition of Personally Identifiable Information expanding and encompassing more data, all entities who store information – community associations, property managers, and also property owners – have an exposure to that information being stolen, and that can generate financial liability for those entities.”
One of the biggest threats facing property managers, real estate agents, brokers, and condo and homeowner associations, is extortion demands following a ransomware attack, according to Lina Gallego, cyber program underwriter at New Empire Group. The ransom can range up to $15,000 or higher, and, unfortunately, entities often have to pay the sum to access their data.
But the fallout from a hack attack goes beyond the event itself. A forensic team may have to be called in to do a full evaluation and ensure that a data system is clean from nefarious software, explained Gallego. This can cost tens of thousands of dollars, not to mention the revenue that’s lost when an entity’s doors are closed for any period of time following a cyber breach.
“Major disruption could also mean a huge financial loss to an entity,” she added.
New Empire Group offers an insurance program tailored just for community associations, property managers, and property owners to protect against damaging cyber security incidents. Cyber$ential offers insureds the ability to mitigate and defend against data breaches, hacking, physical theft of files, and other threats they could potentially encounter.
“We’ve had a lot of success with the program,” O’Neill told Insurance Business, adding that the rates are very competitive when compared to the standard market, and when compared with the impact a major breach can have on a company’s bottom line. Considering that every system in America has likely been hacked at some level, he added, for most entities, it’s a question of ‘when,’ not ‘if.’
“As smart as the security experts are, the hackers are smart too, so it’s a constant battle of who’s got the upper hand at any given time. Even with every control in place, you can still have rogue employees that can get into the system, that have access to it, that can cause damage. Many hackers also get into the system when they manipulate the cooperation of potentially unwitting people who have access to the system.”
Businesses dealing in real estate shouldn’t go it alone with their coverage. Community associations want to make sure they’re protected, but they also want to make sure their property manager, who also holds the same personally identifiable information on their system, is covered as well. Prevention is likewise an important component in the defense against hack attacks.
“Our program provides some neat risk management features and education for the insureds so they can better prepare themselves should something occur,” said Gallego. The Cyber$ential program offers incident response planning and regulatory counseling, along with personalized breach consulting, damage assessment, assistance with notifying consumers, and media relations counseling.
Though awareness around cyber risk is growing among associations, as well as property managers and owners, New Empire Group still has its hands full spreading the word.
“There are many associations still open to risk,” said Gallego. “There’s just not enough education out there and enough buzz.”