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S pring P review By Michael Mullin, Integrated Business Systems, Inc. Material Misrepresentation: A Cyber Insurance True Story
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answer, and Travelers could not prove their compliance. This turned out to be a signif - icant error with long-ranging financial implications. The Power of Preparedness Reflecting on the ICS ordeal, a question arises: How truly prepared are we? The chal - lenge lies not only in imple- menting policies but also in ensuring procedural fidel- ity . Could regular checks and balances provide that coveted peace of mind? What strategies can we employ to enhance not only the accuracy of our applica- tions but also the resilience
of our systems? What if our cyber defenses included a methodology that consistently and regularly measures internal policies against our cyber insurance requirements? What if we could quickly adapt to new threats, require- ment changes, and real-world scenarios through our ongoing checks and balances? Beyond the Surface: Getting and Keeping Your Coverage We’ve seen it happen when well-meaning insurance advi - sors suggest that “yes” is the right answer to every question asked in the cyber insurance
application process. Not so.
to the cost of implementing the policies and procedures, the technological solution, or both, including an assessment of the potential costs if you are the victim of a cyberattack. In most cases, the cost of im - plementing a cybersecurity so - lution will be significantly less than the cost of self-funding recovery from a cyberattack. All the Last Details Here’s what happened: Trav - elers Property Casualty Compa - ny of America filed a complaint in federal court for rescission and declaratory relief against its insured, International Control continued on page 7A
s the financial leader of an organization, you’ve likely always trusted in
The correct answer is the accurate one; otherwise, you risk being denied coverage due to the dreaded phrase that Travelers has heard too many times: material misrepresen- tation. The finding was that their assertion that they had MFA in place was a material representation that made it possible for Travelers to deny their claim definitively. Suppose the accurate answer will cause your premium to be higher. In that case, you’ll need to evaluate whether the higher price is worth paying compared
predictabili - ty. Numbers do not de- ceive—they exist, telling their story with stark honesty. But what h a p p e n s
Michael Mullin
when the variables are as un - predictable as a cyberattack or a compliance misstep? Imagine, for a moment, the intricate network of our systems, each aspect relying on the others to remain functional. Now, imag - ine a single, overlooked error, a missed digit, an unchecked box. This case involving Travelers Insurance and ICS struck a far- reaching chord with both large and small businesses, illustrat - ing how a single “yes” answer on the cyber insurance application triggered a cascading impact, ultimately resulting in not only a denied claim but also a lawsuit and the rescission of the entire cyber insurance policy. Today’s fact: Cyber insurers lost money until they changed three key aspects: their appli- cation questions, compliance requirements, and the level of scrutiny they applied to the first two in the event of a claim. Guess which one bit Travelers Insurance? Reading Between the Lines The courtroom drama sur - rounding the Travelers/ICS matter reveals a simple yet daunting truth: accuracy is paramount when dealing with cyber insurance. Here lies the paradox: While your team may believe the answers they provided in the initial cyber insurance application or the renewal process are accurate, the finer details of your cyber defenses demand thorough inspection, as that is where the actual risks often lurk. The most critical piece is this: what your company states in the initial or renewal applica- tion must remain valid for the life of the policy, and you must be able to prove your compli - ance on demand as long as the policy remains in force. And if you have a cyber insur - ance claim, the most critical piece is the PROOF piece. Travelers said they had multi-factor authentication in place for all critical sys- tems. This was an inaccurate
FUTURE -PROOF! HACKER -PROOF! DISASTER -PROOF! SECURE YOUR COMPANY TO THRIVE IN THE NEW DIGITAL ECONOMY.
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