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Identify theft Chubb's approach to managing the risk for affluent insureds By Phil Zinkewicz In the world of Hollywood science fiction lore, identity theft usually means that aliens have come to our planet and absorbed the minds and memories of unsuspecting earthlings. We’ve seen variations on this theme innumerable times. But in the real world of the 21st century, identity theft is less dramatic, albeit no less pernicious. A stolen credit card, an illegally obtained Social Security number, a computer hacker tapping into someone’s e-mail—all of these situations can be costly and time-consuming for the average, honest citizen. The Federal Bureau of Investigation has called identity theft “the fastest growing crime in America,” estimating that there will be between 900,000 to 1 million new cases of identity theft this year. More than $700 million has been lost in online sales due to fraud in the last two years. By 2006, financial institutions are expected to lose $8 billion through identity theft. The average victim will spend more than 175 hours and up to $25,000 to repair the damage resulting from identity theft. The rich are different But what about the not-so-average victim—the affluent American? When identity theft occurs as a result of a stolen credit card or other types of illegally obtained information, banks and credit card companies have been willing, so far, to “eat” the loss if it is not too great and if the theft is reported promptly. But identity theft of the affluent can be much more complex and can result in losses of huge amounts of money to the victim. For the Chubb Group of Insurance Companies, whose personal lines book of business is concentrated on upscale exposures, identity theft targeting the affluent has become a cause celebre. Chubb is offering its policyholders not only comprehensive coverages against identity theft, but also risk management techniques to mitigate the possibility of identity theft. For example, the Chubb Masterpiece policy provides coverage up to $25,000 for expenses incurred by a policyholder to clear his or her name after an occurrence of identity theft and credit card theft on the Internet, according to Christie Alderman, client services manager for Chubb Personal Insurance. Less a $500 deductible for each occurrence, the policyholder will be reimbursed for the cost of the following: notarizing affidavits or similar documents for, or sending certified mail or making phone calls to, law enforcement agencies, businesses, credit grantors and credit agencies; reapplying for a loan when the original application was rejected because the lender received incorrect credit information; earnings lost by taking time off from work to complete fraud affidavits or meet with law enforcement agencies or credit agencies, merchants or legal counsel, up to $250 a day or a total of $10,000; and reasonable attorneys’ fees incurred to defend against lawsuits by businesses or their collection agencies, remove criminal or civil judgments wrongly entered against the insured or to challenge information in a consumer credit report. Restoration services Chubb’s Restoration Service complements those coverages. Chubb has partnered with Identity Theft 911 to help its homeowners customers recover or recreate missing personal identification and documentation after a disaster or other mishap. Identity Theft 911 provides enterprise-level fraud solutions to Fortune 500 companies, a wide spectrum of financial institutions, colleges and universities, and many of America’s largest insurance companies and corporate benefits providers. Chubb policyholders’ complimentary access to Identity Theft 911 also assists when they fall victim to identity theft. Identity Disaster Response 911 works with government agencies and financial institutions to replace not only documents such as birth certificates, driver’s licenses, passports and Social Security cards but also checks and credit/debt cards. Says Alderman: “This new service is especially important following a hurricane, terrorist attack or other catastrophe when individuals may have quickly evacuated their homes, potentially leaving behind some forms of identification, bank account numbers and various insurance policies. In situations like these, people cannot even begin the road to recovery without valid identification and other personal records. However, Identity Theft 911 will also help Chubb homeowners customers resolve credit and other problems in the event of identity theft and fraud. The firm will assign a personal advocate to guide a victim through the complicated process of identity theft recovery.” Another step Chubb has taken to assist its policyholders in the area of identity theft is contracting with Risk Control Strategies (RCS), a leading resource for comprehensive security solutions for corporations, municipalities and high-net-worth individuals. RCS is known for its expertise in providing assessments and recommendations for reducing exposures to, among other things, identity theft. Debunking myths Paul Viollis of RCS acts as Chubb’s personal security consultant. He says there are a number of “myths” surrounding identity theft. Says Viollis: “One myth is that if you’re not famous, you’re not a potential target for identity theft. The fact is that everyone is susceptible. Many people think that because they are not celebrities and don’t engage in risky behaviors such as gambling and excessive partying, they are not targets for identity theft. Wrong. “Unknowingly, people often draw attention to themselves through their wealth profiles,” Viollis continues. “Simply making an impressive purchase or donation could put someone on a thief’s radar. If you purchase online, make donations, serve on any boards or have a family office, you must be extremely careful with your personal information.” Another myth, according to Viollis, is that merely shredding bills is enough to safeguard against identity theft. “The most vulnerable path for identity theft is how people communicate. Landline and cellular phones and unencrypted Internet connections are prime ways for thieves to obtain private information better kept confidential. For example, thieves can steal credit card information from purchases made on the Internet, such as plane tickets, and then tap into your phone to find out when your home will be unattended while you’re away.” Viollis notes that one need not significantly alter his or her lifestyle to protect against identity theft. “Securing your family’s communication through an encrypted server and running all calls through a Security Operation Center can mitigate the possibilities of identity theft and, once in place, these provisions are hardly noticeable,” he says. Donating money anonymously or under a different name or through an LLC on which one doesn’t sit on the board can go a long way toward securing one’s identity, according to Viollis. The security expert points out that fully 80% of identity theft originates “within the circle,” meaning that acquaintances whom one doesn’t know well, servants or business associates such as consultants and advisors may be a possible source of identity theft. “Background checks should be done on all servants and employees before hiring,” says Viollis. Sensible steps Other steps that can be taken to prevent identity theft include: • Examine security for off-site locations where access to personal and private information is available. • On a periodic basis, order and examine your credit report from each of the three major bureaus. • Close or cancel any credit cards that you no longer use. • When traveling for extended periods of time, use different people to pick up mail. • Always use a U.S. Postal Service mailbox to send mail or pay bills. • Be sure that effective and efficient firewall and anti-virus software is installed in all computers. • Copy all items you carry in your wallet. Finally, Viollis advises, always report identity theft incidents to the police, call the three national credit reporting organizations—Equifax, Experian and TransUnion—and contact the Social Security Administration and the Federal Credit Reporting Agency. “That may sound obvious, but you’d be surprised how many people don’t report identity theft because they feel violated, embarrassed and humiliated,” says Viollis. “But this is the 21st century, and our thieves today are sophisticated 21st century thieves. They are pros. And we have to behave professionally if we are to fight them off.” * |
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