Are Mortgage Bankers required to have a Cyber Insurance Policy?
Are Mortgage Bankers required to have a Cyber Insurance Policy?
Last week we discussed the importance of understanding what coverages your E&O policy actually extends to.
This week I would like to dive deeper into the protections provided under a cyber insurance policy and how it can be utilized as a risk mitigation tool for your mortgage banking business.
Now, if you have not yet done so, remember to take advantage of our complimentary 30-minute initial strategy call where we analyze your situation and discuss whether a banker transition process is right for you!
During this call, we will provide practical expertise and understanding of the process from mortgage licensing, investor approval and relations, warehouse bank selection, third party fulfilment providers, E&O and Surety bond companies, origination strategies, coaching, consulting, and more!
SeanS@BrokerToBankerConsulting.com
Call/Text: (714) 844-7146
A cyber insurance policy covers expenses and liability resulting from the release of consumer or employee personally identifiable information (PII). These can include, but are not limited, to the following costs:
- Forensic and Legal Expense
- Crisis Management Costs
- Public Relations Expense
- Extortion Costs
- Fraud Response Expense
- Business Interruption
- Data Asset Restoration
- 3rd Party Liability
- Notification costs, and
- Social Engineering
To help put the risk in perspective, IBM’s 2020 Cost of a Data Breach Report documented the average cost per record for data compromised that contained customer personally identifiable information was at $175 per record!!
As such, it is important to under what your organization’s potential data breach exposure is. If you take the $175 Cost Per Record from the IBM report and multiply it by your organization’s total records, this will help you quantify your potential exposure.
When determining potential exposure, remember that this not only includes closed loans at risk, but also anyone who has submitted their personal information such as for pre-qualifications, pre-approvals, loans in progress, denied, and withdrawn loan files. Needless to say, the potential risk and cost exposure can be extremely high and very scary!
Thus, it is extremely important to review your policy, understand the declarations page, and the definitions included within your policy.
For illustration purposes, I have provided a cyber insurance policy declarations page which shows a total policy limit of $1,000,000.
Below that, it shows a sub limit of the policy which provides $100,000 for social engineering. A sublimit is a limitation in an insurance policy on the amount of coverage available for a specific type of loss. This will be part of your coverage limits and not in addition to them.
For example, even though the total policy limit was for $1,000,000, because it has a sub-limit for Social Engineering Fraud, this limits that loss up to only $100,000 of that total limit, not in addition to. Once again, I can’t emphasize how important it is to understand your cyber policy, declarations page, and applicable definitions. Remember to ask questions during your cyber insurance application stage and any subsequent renewals.
Although Cyber insurance is not usually a required coverage, it is highly recommended for mortgage bankers due to the current threat landscape
Now, wouldn’t it be nice if there was a blueprint available that would walk you through the steps on how to climb the mortgage banker ladder!
Well, that is where we step in to help with our practical expertise and understanding of the process from mortgage licensing, investor approval, warehouse bank selection, third party fulfilment providers, E&O and Surety bond companies, origination strategies, coaching, consulting, and more!
You can simply use our online scheduler to select a convenient consultation time and let us show you the Path to Prosperity!
Sean A. Stephens, Esq., CMB®
Broker to Banker Consulting, LLC
SeanS@BrokerToBankerConsulting.com
Call/Text: (714) 844-7146
Toll Free: (866) 989-0564 Ext. 419
Sean A. Stephens, Esq., CMB®
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