Run Time: 30:20
EP. 10: Insurance Industry Stepping Up as Cyber Risks Mount for High-Net-Worth
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Cyber attacks can strike any individual or business at any time, but on this episode of the Insuring Cyber Podcast, Insurance Journal's Elizabeth Blosfield spoke with two guests about one particular segment of the population that can prove to be a lucrative target for cyber criminals: the high-net-worth space.
Hayden Kopser, co-founder and president of North Improvement, has experience working with high-net-worth clients and understanding their cyber risks. On this podcast episode, he discusses the main threats he's seeing in this sector, pointing to funds transfer fraud, which involves the unlawful taking of funds from a victim's account, and social engineering related financial loss, in which methods are used to manipulate or trick individuals into giving away sensitive information or funds.
"That goes for high-net-worth and ultra-high-net worth. Cyber thieves [are] becoming increasingly sophisticated at infiltrating the communication chain leading up to high-dollar transactions," he says. "As I'm talking to my high-net-worth clients, as I'm talking to business owners who conduct online transactions, more and more often I am hearing - and even before I can bring it up sometimes - I'm hearing about people being defrauded online."
Kopser says one area to watch for cyber-related theft in the high-net-worth space involves art transactions, in which criminals are using email spoofing to commit financial theft.
"This could happen to any art transaction, just as it can happen to real estate transactions or collector car sales," he says. "The reputational fallout is tremendous when that happens."
Darren McGraw, president of Mechelsen Private Client, says earlier in this episode that one reason cyber criminals tend to target high-net-worth clients is because they typically have a faster and broader adoption rate of technology, meaning they have more windows into their cyber lives than those with a different financial profile who may be slower to adopt expensive technology. Especially now with more time being spent at home on devices due to the pandemic, he says cyber risks are mounting.
"I think our role in the industry first should be as educators, as a way to stand up and teach people - not just in our industry, but outside the industry - what the cyber risks really mean and what ways they may have to respond," he says.
McGraw says the good news is that he has seen more high-net-worth insurance carriers boosting their cyber offering as the risks mount due to increasingly sophisticated ransomware, data theft and cyber extortion attacks.
"I think we should be proud of the fact that the insurance industry, both the manufacturers of the products and the brokers who bring them to market, sees this as a risk that needs insurance to support it, and it was developed and released," he says. "I think the insurance industry is kind of the leading edge of the sphere on coming up with ways to fund and finance the losses that face high-net-worth families."
Check out the rest of this episode to see what else Darren and Hayden have to say and be sure to tune in for new episodes every other Wednesday published along with the Insuring Cyber newsletter. Thanks for listening.
