Client Stories | September 10, 2021
Early in the COVID-19 pandemic, an established third-party administrator (TPA) that prioritized security, but didn’t have a cyber liability policy, found itself in a potentially precarious position. One of its longstanding key clients announced a requirement that vendors have that coverage.
The TPA has always taken security seriously. It has strong controls in place and makes sure that its staff fully understands the risks inherent in lax procedures. Its computer systems have up-to-date virus protection. Moreover, the TPA has never experienced a breach of any kind. Consequently, management thought that it didn’t need to purchase cyber liability coverage.
That assumption was challenged when cyber criminals began to take advantage of businesses that allowed staff to work remotely during the pandemic. The news carried one story after another about the increasing number of attacks.
The need for a cyber policy became critical when a major client declared that it would terminate its contract if the TPA did not have a policy in place within a month.
The TPA first contacted the broker it used for property insurance and other coverages. That broker explained it could not secure a cyber policy within the one-month timeframe. A senior leader at the TPA, who had attended our Cyber Month webinars, reached out to us for help.
The Segal insurance broker who responded to the inquiry realized timing would be tight to secure quotes, even though they have not had any breaches and security at the TPA fit positive risk profiles. The TPA asked for more than one carrier option and was especially interested in carriers that offered effective risk-prevention tools for cyber clients.
With the year-end quickly approaching, Segal’s broker assisted the client in completing the application and gathered quotes within two weeks. One positive outcome of the pandemic has been greater acceptance of virtual meetings; the broker was able to present to the TPA’s management team. The TPA was keen to discuss how various limits and deductible levels might affect both the cost and the protection offered by the policies being considered.
The breadth of information and analysis our broker provided enabled the TPA’s management team to reach a decision quickly. By the end of day, and within hours after the presentation, management made a selection. The coverage binder was secured soon after — well within the original, seemingly impossible, one-month turnaround time. By obtaining cyber coverage by the client’s deadline, the TPA retained the client.
This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.
Don't miss out. Join 16,000 others who already get the latest insights from Segal.