The Cyber Crook

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Most people think of insurance as a mechanism to insure things such as a house, car, jewelry, boats and other tangible items. Now that the Internet is entrenched in the way we do business there is a new exposure that is just as real-cyber crime.

There have been more and more instances where a hacker has been able to infiltrate not only personal databases but commercial ones as well where information is not only stolen but also utilized to cause further financial damage to the victim. The most frightening scenario is where the hacker thief accesses the banking information of the unsuspecting person or business and arranges a money transfer to an unknown account. The bank will honor the instructions since it appears to come from the depositor. The bank may not take responsibility for the fraudulent transaction since it came from your Internet site and therefore it is not considered a bank error.

Fortunately there are insurance policies that will reimburse for a fraudulent money transfer as well as protect for other first party losses such as a virus which may wipe out an entire database.

In addition, insurance is available for third party cyber liability where a business may inadvertently disclose confidential client information such as social security numbers or credit card data or introduce a virus to another entity.

There are many scenarios of potential cyber crime. It is important for an individual or business to assess their exposure and utilize risk management techniques and/or insurance for protection.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

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Show Me The Money

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As a follow up to my previous blog, I would like to comment on the financial issues of both The federal Flood program and the Federal Emergency Management Agency (FEMA) in general. Several years ago the Federal Flood Administration, which is a division of FEMA was financially sound and the premiums charged were roughly equal to the claims paid. Katrina and the Mississippi floods changed all of that and the program was quickly put in the red. Subsequent storms including the latest Hurricane Sandy have exasperated the situation and the Flood program is considerably in debt. FEMA is actually worse off because it has no income source and since the United States has to borrow 40% of its budget, FEMA is part of that borrowing. In other words the Chinese and other creditors are financing the FEMA relief effort. When our President says, “tell us what you need” to the afflicted regions, he must know that there is no reserve or rainy day fund to help. It is not even taxpayer money since all of the taxes have been used for other things and we still have to borrow over one trillion dollars a year to pay remaining expenses-irrespective of FEMA. FEMA is a necessary and important Agency but it is unfunded-just like the Social Security Fund, which should have trillions in cash but really has nothing but “IOUs” in its coffers. FEMA’s noble mission may be disaster aid and assistance but its stewardship is just plain disaster.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

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