September 29, 2023
The Vital Role of Cyber Liability Insurance
Countering the Surge in Financial Losses Due to Cybercrimes
In recent years, we at Reliance Partners have witnessed the increasing significance of cyber liability insurance in the arsenal of freight brokers. The realization that a well-thought-out strategy is paramount has led many in the industry to adopt this crucial safeguard.
Cybercrime has emerged as a formidable financial threat to both individuals and businesses alike. Disturbingly, according to the annual report from the FBI’s Internet Crime Complaint Center, cybercrime complaints more than doubled from 2018 to 2022, with losses soaring from $2.7 billion to a staggering $10.3 billion during the same period.
The logistics and supply chain sectors, being linchpins of the economy, find themselves prime targets for cyberattacks. This includes our valued freight brokers, who play a pivotal role as intermediaries between carriers and shippers. Their unique position exposes them to cyber threats as they rely heavily on various tech platforms, including load boards, carrier vetting software providers, and their proprietary systems, all of which transmit sensitive data.
The stakes are undeniably high if a freight broker or their business partner falls victim to a data breach. The repercussions can include identity theft, damage to reputation, financial losses, and even the loss of valuable contracts.
Cybercriminals continually adapt their tactics to deceive their targets. Presently, social engineering techniques pose a substantial risk. At Reliance Partners, we’ve observed a surge in reported claims related to social engineering, necessitating heightened vigilance among brokers.
Social engineering encompasses various forms, such as phishing (via email or websites), vishing (through voice communication), and smishing (via SMS or text messages). These attacks can occur suddenly, as illustrated by a scenario where a freight broker unwittingly shares account credentials with a perpetrator who impersonates them on a load board platform.
Another pressing cybersecurity threat is ransomware, a malicious software that encrypts data and holds it hostage until a ransom is paid. This not only entails the cost of the ransom but also additional expenses to resolve the situation.
“Protection against ransomware and ensuring business continuity during such crises is of utmost importance,” emphasizes Jamie Cannon, Vice President at Reliance Partners.
To enhance security and minimize risks, Cannon recommends implementing multifactor authentication (MFA) whenever possible. MFA requires multiple forms of verification during login, bolstering the assurance that the account holder is legitimate. Continuous employee training is also encouraged to thwart cybercrime, especially social engineering schemes.
Over the past two years, cyber liability insurance has become an integral part of risk management for freight brokers. At Reliance Partners, we offer specialized cyber liability protection tailored to help mitigate the aftermath of cybercrimes.
Our cyber liability protection encompasses a range of critical coverages, including:
- Identity and data recovery.
- Loss of income resulting from network outages.
- Ransom payments to regain access to your data.
- Lawsuit coverage for privacy breaches.
- Public relations support.
- Protection against regulatory fines.
Reliance Partners maintains access to a diverse array of cyber liability markets and customizes coverage annually based on individual exposure and requirements.
“Our approach to addressing freight broker exposure is unique, prioritizing coverages that suit their specific needs,” assures Cannon.
While recommended coverage limits typically start at $1 million to $5 million, higher-revenue customers may necessitate greater limits due to their elevated exposure and risk of loss. Nonetheless, businesses of all sizes remain vulnerable, as some cybercriminals deliberately target smaller to mid-sized companies lacking the advanced software protections often afforded to larger entities.
It’s crucial to collaborate with an insurance agent well-versed in your operation type to accurately gauge your exposure. Reliance Partners, with its longstanding commitment to cyber liability coverage, collaborates with markets intimately familiar with the vulnerabilities faced by freight brokers.
Though the transportation industry remains a target for cybercriminals seeking financial data and sensitive information, freight brokers can fortify their defenses by taking proactive measures and shielding themselves with the indispensable shield of cyber liability insurance.